DXY: What Is Happening To the USD?
The second Monday of October in the United States marks the legal holiday 'Columbus Day', commemorating Christopher Columbus' first voyage to the Americas in 1492. This day poses significance for traders as the US Bond markets are closed, meaning the USD is deprived of a key source of strength. All of this means that we start the trading week relatively quiet. It is possible that we will see a gap open in the US Bonds market when it re-opens on Tuesday, this means the Forex market (particularly USD pairs) will likely see a bit more volatility than usual.
The DXY is currently sustaining about our 95.50 level of support following a couple of wick rejections retesting this region. Today will be interesting to observe if the Dollar can continue to strengthen with the possibility of higher volatility. A drive all the way up to 97.00 is looking as likely as ever now we seem to have broken free from the previous range.
USD/JPY is definitely on the watch list, last week we saw the pair smash through 113.00 to reach a peak at around 114.55. As stated in a previous article we have now fulfilled the retest of our new level of support 113.00. With most of the JPY pairs melting on Monday the bears seem to be struggling to take USD/JPY any lower with the current demand for the US Dollar.