Good evening team,
From a fundamental perspective, the DXY may see some selling pressure in the near term due to a number of economic reasons. By now you should all understand the impacts of quantitative easing from the FED (increased money supply). Furthermore, there has been a decrease in the number of people looking to hold US dollars due to the devaluation and risk-on market sentiment. Therefore simple supply V demand strategy has pushed the USD lower since the covid-19 pandemic recovery. Now, this is where it gets interesting. Fresh reports coming from South America are suggesting there are a number of nations who are potentially looking to remove the USD as their legal tender and replace the currency with BTC. The President of El Salvador has already proposed these changes and countries like Paraguay, Brazil and Argentina are on the watch list.
These countries have been hit the hardest due to the extreme money printing from the FED, an example is looking at Argentina where the 12-month rolling inflation hit 42.6%. These countries have not received any of the monetary support but are having to come to terms with the huge decrease in USD purchasing power. There could be a domino effect coming into play, if and when the first country pulls the trigger and makes BTC their legal tender, it could be the start of a much larger play. I will be tracking this story over the coming weeks.
This will also be bullish for metals and especially gold as the safe-haven play. We will be looking to buy into a gold position very soon but I would like to see a small correction on the metal.
AUDUSD 1 Hour Charts
The plan here is to buy dips into the 0.7680 support zone in anticipation of a move higher. The triangle formation can only occur in wave 4 or wave b, therefore this large correction should be moving higher once complete.
Trade Setup: BUY LIMIT – Entry price 0.7680, stop loss 0.7580 and take profit 0.8000.
Stop loss: 100 pips
Take profit: 320 pips