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It was not Powell who judged the case, but PCE. The life of the US dollar was revealed overnight.
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: It is not Powell who judged the case, but PCE, and the life gate of the US dollar will be announced overnight." Hope it will be helpful to you! The original content is as follows:
On Friday (September 26), the US dollar index (DXY) traded around 98.50 in the European session, approaching the nearly four-week high. The market focuses on the August PCE price index released tonight at 20:30. As the inflation caliber that the Federal Reserve values most, PCE's monthly rate and core annual rate readings are likely to become the "last blow" that affects the direction of the US dollar before the quarter ends. The current consensus is: core PCE monthly rate is 0.2% (previous value 0.3%), core annual rate is 2.9%, and headline annual rate is 2.7%.
美联储在9月会议后释放“审慎放松”的基调,利率期货几乎完全计入10月再降息25bp,同时对12月再降25bp的概率约75%;而年内累计降息50bp的概率一周内从78.6%降至62%。 Against this background, the US dollar is approaching the key position of technology, waiting for the data to give directional clues.
Fundamentals: Triple transmission of PCE readings to the US dollar
1) Policy expectation channel: If the core monthly rate falls at 0.2% or less, inflation cooling will strengthen the path of "two 25bp times this year" and lower the slope of the medium and short-term yield curve, and the US dollar is prone to technical retraction in the short term; if the monthly rate unexpectedly returns to 0.3% or more, inflation stickiness and service "super core" resilience will be postponed to further easing, and interest rate spreads support will raise the US dollar.
2) Risk premium channel: geopolitical uncertainty has risen recently, and the US dollar's risk aversion attribute has been passively enhanced. Even if PCE is slightly soft, as long as the risk premium does not fall, the room for US dollar retracement may be limited.
3) Structural channel: Tariff factors are still slowly moving towards core www.xmtraders.commoditiesPrice transmission, and the intensity of "service sub-cooling" remains to be verified. If the data tonight shows a www.xmtraders.combination of "commodities are slightly hot and services are weak", the repricing of the final interest rate value by the US dollar will be more restrained, and it is more likely to be reflected in the delay of the path rather than the reversal of the direction.
Technical aspect
View from the daily chart:
Boletney band: middle rail 97.7573, upper rail 98.6943, lower rail 96.8203. The current price has firmly stood on the middle rail and approached the upper rail. The Bollinger bandwidth has expanded gently again after converging www.xmtraders.compared with the previous period, indicating that the volatility has rebounded and the trend direction is enhanced.
Price structure: The K-line continues to rise, and has recently risen by 98.5950. The above is the dynamic resistance of the upper track of 98.6943; the upper historical dividing line is at the 99.50 line, and the key high point at the far end is 100.2599. The dynamic support below is 97.7573 (middle track). If it falls below, focus on 96.8203 (lower track) and the recent low of 96.2109.
MACD: DIFF-0.0240 passes through DEA-0.1563, forming a golden cross below the zero axis. The bar chart 0.2646 turns from negative to positive, and the kinetic energy enters the early stage of idling. If the price can successfully break through the upper track, the golden cross is expected to return to the zero axis and further strengthen.
RSI(14): Reading 57.9729 continues from above the 50 center, without touching the overbought zone, and tends to be mild bulls; if it breaks above the 60-65 range, it often means that the trend funds will be increased in distribution.
Summary: The technical side is in a critical state of "a strong retracement has not been seen, and a breakthrough is about to break out". 98.6943 is the primary resistance and 98.5950 is the signal position for the final kick; support focuses on 97.7573/96.8203/96.2109. Before and after the PCE announcement, pay attention to the authenticity and false breakthroughs near the upper track and the subsequent backtest quality.
Prevention of market sentiment:
Path dependence: After the September meeting, the Fed's "cautious interest rate cut" www.xmtraders.combined with "risk preference cooling", allowing the US dollar to maintain a dual support pattern of "basic bottoming + emotional bottoming". DXY hit a four-week high of about 98.60 on Thursday, and the emotional level changed from defense to counterattack.
Expected anchor: Since Powell mentioned the judgment of 2.7% of PCE headlines in August and 2.9% after the meeting, the consistency expectations have been strengthened. What can really control the market will be the fine granularity changes in the core monthly rate and service over-core service.
Odds and Differences: FedWatch shows that October 25bp is almost certain, with the 50bp probability falling back to 62% this year, which means that the market's dovish expectations are being "calibrated". Therefore, unless the data is "significantly hot" or "cold beyond expectations", the US dollar is more likely to advance along the technological structure rather than emotional unilaterally.
Future Outlook: Multi-Scenario Deduction
Scenario A (Benchmark): Core Monthly Rate = 0.2%, annual rate = 2.9%. The policy path remains unchanged, the US dollar is at 98.6943 Repeated pulls around; if there is a false breakthrough after the first surge, the backtesting strength and weakness of the retreat to around 97.7573 will determine the subsequent rhythm. If the measurement can be reduced and the RSI is maintained at >50, it will still be on the step-up in the future.
Scenario B (heat): Core monthly rate ≥0.3%. Inflation stickiness is rising again, interest rate spreads resonate with risk aversion, the US dollar has risen to the upper track with a high volume and directly points to the range of 98.80-99.00. After standing firm, it is expected to launch a technical impact of 99.50-confirmed, and the remote target is focused on 100.2599.
Scenario C (moderately cold): core monthly rate ≤0.1%. The Fed's pace may be moved forward or the amplitude will be strengthened during the year, and the US dollar index may accelerate its retracement. Let's look at 97.7573 first, and if it falls below 96.8203, if it is www.xmtraders.combined with MACD weakening again and RSI falls back below 50, it will be switched to a high-level consolidation-a trend of returning to the middle track.
The above content is all about "[XM Foreign Exchange Decision Analysis]: It is not Powell who judged the case, but PCE, and the life gate of the US dollar will be announced overnight". It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your transactions! Thanks for the support!
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