USD/HKD Forecast: Faces Key Support
- The US dollar has declined over the past couple of days, with the 50-day EMA acting as resistance.
- This suggests continued downward pressure, with the USD likely to target the 7.7875 level as a potential support area.
- This is an area that has been important more than once and therefore I think you have to pay close attention to it.
- With this being the case if we were to break down below this 7.7875 level on a daily close then we could see the US dollar really start to sell off.
Overall, this market will be noisy
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1In general, this is a market that continues to see a lot of choppy and noisy behavior. And at this point in time, the market will continue to see a lot of questions asked about risk appetite. Keep in mind that although the United States dollar is considered to be a safety currency, it's also worth noting that the Monetary Authority of Hong Kong does have a fairly tight monetary policy. And with that being the case, the market is going to pay close attention to how that central bank behaves in reaction to the federal reserve.
Keep in mind that this is not a free floating currency and therefore it has specific targets that it aims for at this point in time, the 7.8050 level above could offer quite a bit of resistance, but if we were to break above there, then the market could go looking to the 200 day EMA. The 7.7875 level being broken down below probably means that we would see the US dollar weaken against almost everything. If that were to happen, it’ll be interesting to see what the situation is going forward as the FOMC meeting on Wednesday will certainly have a major influence on what happens next. If Jerome Powell suggests that the Federal Reserve is going to become extraordinarily loose with its monetary policy, that could send the US dollar really.
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