DXY ( US dollar index ) which measure the greenback’s strength against a trade-weighted basket of six major currencies has constantly dipping below , currently at 93.890.
Downswings break below strong support at 94.99, the upswings to restrain below 7SMA.
As the major trend goes into the consolidation phase, you could see constant slumps after pattern at peaks; the dollar downtrend hits multi-month lows & slide below EMAs. Both leading & lagging oscillators to substantiate. As a result, bears are now on the verge of hitting 13-months lows.
But considering the dollar’s uptrend in major trend, the swings could go in either direction with the major trend goes in consolidation phase or the resumption of the uptrend.
Hence, in order to arrest the potential upswings, we advocate the below recommendation:
Initiate long in 2w ATM +0.51 delta call, and simultaneously buy ATM -0.49 delta put of the same tenor for the net debit.
Well, this options trading strategy that is used on hedging grounds when the options trader ponders that the underlying spot FX prices would experience significant but not sure of the direction of the swings.
The overnight has two readings, which are necessary and complementary to read risk event premiums. The directional purpose is related to the straddle break even, while the purpose is linked to the realized intraday .
Alternatively, contemplating above technical reasoning, on trading perspective, it is advisable to buy boundary binaries on dips upper strikes at 94.20 and lower strikes at 94.45 levels; the strategy is likely to fetch leveraged yields as long as underlying spot FX remains within these strikes on or before the binary expiry duration.