Price and Chart Analysis for the US Dollar (DXY)
before adding, “but still has a long way to go,” that “these are the very early phases of disinflation.” At the FOMC meeting last week, Chair Powell used the term “disinflation” for the first time in many years. As price pressures in the US continue to diminish, it now appears that we may expect to hear it frequently going forward.
Following Mr. Powell’s address at the Economic Club of Washington yesterday, risk markets changed from negative to positive, with the majority of indexes ending at or near their daily highs. Markets anticipated that Chair Powell will reiterate his recent hawkish narrative in his speech, especially in light of last Friday’s historic US Jobs Report.
S&P 500 Price Chart for the Day
Data from retail traders reveals that 38.47% of traders are net long, with a short-to-long ratio of 1.60 to 1.
Traders who are net-long are down 9.85% from yesterday and down 6.95% from last week, while those who are net-short are up 2.01% from yesterday and down 3.68% from the previous week.
We frequently adopt a contrarian stance to the general consensus, and the fact that traders are net-short means that US 500 prices may climb in the future. We have a higher US 500-bullish contrarian trading bias as a result of the traders’ increased net-short position compared to yesterday and last week.
Daily Price Chart for the Nasdaq 100
Although Powell’s remarks from yesterday may have delighted the doves, a half-dozen Fed members scheduled to speak today might change the market’s mood. John Williams speaks first, followed by Lisa Cook, Michael Barr, Raphael Bostic, Neel Kashkari, and Christopher Waller at 09:15 EST.
In contrast to the stock market, the US dollar reversed course yesterday following three days of significant gains. On Tuesday, the US dollar reached a one-month high before Powell’s appearance caused the currency to fall. Using the CCI indicator, the dollar is still in overbought condition and might continue to decline over the next several days.