Daily Market Recap – DXY Towards a continuation of the bullish reversal?

The dollar has been trying to recover since the beginning of the week in the face of market participants' fears about the “Delta” variant of COVID-19. The rise in infections in several European, Asian and Pacific countries has investors worried that the economic recovery may come to a halt.

Forex traders are now waiting for the monthly employment report in the United States, which will give a better idea of the timing of the Fed's upcoming tapering. Indeed, the better the statistics, the better the chances of a rapid normalization of the Federal Reserve's monetary policy.

Specifically, if job creation, the unemployment rate, and the participation rate surprise expectations this summer, the Fed could announce a reduction in its quantitative easing (QE) program of $120 billion per month as early as September.

Conversely, if the statistics are disappointing, the Fed will probably wait until the end of the year before reducing the amount of its purchases.

In addition, the speeches of the various FOMC members that will follow in the days and weeks after the NFP release will be closely watched by investors, as a change in tone by some would fuel investor speculation on the timing of tapering.

As we await the release of the monthly jobs report on Friday, investors will be watching to see how the spread of the “Delta” variant and its impact on the economy unfolds.

On the technical analysis front, the DXY dollar issued a bullish signal yesterday as the price broke out of the top of its 4-hour time unit Bollinger bands after a period of “squeeze”.

The outlook is technically bullish as long as the DXY does not pull back below its recent low at about 91.52 points. The first major resistance to watch will be the April high at 93.47 points.

(Chart Source: Tradingview 29.06.2021)

A pullback below 91.52 points would turn the short-term outlook bearish to the symbolic threshold at 90 points.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.