E Gold Prices Extend Gains As Treasury Yields Decline

US Dollar Yearly Outlook

Treasury yields have an impact on the country's currency markets. The yearly US dollar index charts show that during its 16-year cycle top, the US dollar hits the most important long-term resistance at value of 102-103 in the falling curve. A quick reversal in the US dollar from the massive resistance indicates that selling pressure is building. From the technical yearly chart, we've been selling US dollars since the Covid-19 pandemic began in 2020.

(Click on image to enlarge)

US Dollar Index yearly chart

US Dollar Index Monthly Outlook

The chart below presents the Total Nonfarm which indicates an increase of 850,000 jobs in June as compared to the month of May. However, there was a 6.7 million job shortfall as compared to the pre-virus peak of Feb 2020. Many companies are struggling to fill the positions as virus safety concerns arise. Since the decrease in the total weekly hours by 3.6% increased the average hour/employee, it helps to improve some of the shortfall. GDP is expected to exceed $T19.3 in Q3 2021, indicating higher productivity. However, the bond market is happy with the June employment report as the 10-year Treasury yields dropped sharply. This recent drop indicates US dollar weakness.

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US NFP

Source: Fred

The relevance of the trading zone is demonstrated by the monthly chart of the US dollar index. The chart was created a few months ago and can be read here. The chart is performing perfectly. When the US dollar index was trading at 89-90 levels, we indicated absolutely that the US dollar index might pump at these levels. The US dollar has climbed from 89 to 92.50 in a matter of days, exactly as per our predictions. But this pump is US dollar has nothing to change the bearish view of the chart.

A declining curve from the high in 1985 to the peak in 2020 is used to produce the long-term monthly chart. We've shown how the US dollar's value would plummet by the start of the Covid-19 crisis in February 2020. The price has dropped significantly from a peak of 102 to a low of 89. The development of a bearish M structure was aided by the fall in the US dollar index. This structure has a strong bearish tendency and is a bearish pattern if the value of 89 is lost. The primary target of 89 was expected to be placed at the lower angle of blue channel support. Necklines in M-type patterns meet the horizontal support at the same point. Since it is mixed up with other types of support, this is referred to as a major support juncture. We believe that in a few months, this juncture will be broken, and the US dollar will fall. Pumping at this level can be done for a little longer. The US Dollar index has been stuck in a sideways range of 89-93 as a consequence of this significant region of support.

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