USD Index has made the most surprising trading move in 2017. At the start of the year, it was trading near 102 but now eight months into the year: it's fighting to hold a very important support level which it has not breached since 2015.
That's not all - the USD index is not only holding Horizontal Support Line of 93 but also standing at the very critical support of 200-week moving average, which normally bullish assets hold.
The Big Picture: USD Index looks like this
The Big Picture of USD index points to USD index taking support at 93 and rallying on the upside.
WHAT IF SCENARIO
But What if USD Index breaks 92-93? Trust me there will be chaos. It's quite amazing that US stock market is hitting new high and there is general bullishness about US economy but USD is moving in opposite direction.
Is USD trying to price in the Political turmoil of US - Debt Stand off and no real movement on taxes? The real threat: If the US legislators cannot reach an agreement by September 29th, the US government may be shutdown and/or the country may enter a technical default, and that will be bad news for US treasuries and dollar. Trump's rhetoric not helping that cause right now
Here's how Indian Rupee (USDINR) looks on the weekly chart
INR has been one of the most stable currencies in the world since last 3 years and now looks extremely overvalued. If USD index slips below 92-93, then INR might strengthen more which means INR heading towards 57-59 levels. I am not sure that will be good news for Indian economy
Nobody knows what will happen. All one should do: Keep a close eye on USD index
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers