Why is the dollar jumping because of France?

[TrendPulse]

Hey everyone, I’ve been watching the charts this morning and noticed the dollar is looking really strong while the euro is taking a serious hit. I keep seeing headlines about violent protests in France dragging everything down, but I’m a bit confused about the connection. Does political unrest in one country usually cause this much volatility across the board, or is this just a temporary overreaction?

I’m still pretty new to the forex side of things and I’m trying to figure out if I should stay on the sidelines or if there’s a way to play this move. Is it common for the euro to get hammered this hard whenever there's civil instability, or am I overthinking the fundamentals? If any of you experienced traders have a second, I’d love to know how you guys usually adjust your positions when news like this hits. Should I be looking to scalp the EUR/USD or is it better to just hold off until things calm down?

 

[ArthurByte]

EUR/USD is getting absolutely nuked because of the French political circus, and since EUR makes up like 57% of the DXY basket, the dollar has no choice but to moon when the Euro drops.

Honestly who cares about the headlines though? The charts telegraphed this whole move. DXY swept sell-side liquidity, tapped a clean H4 bullish order block, and left a massive FVG that buyers didn't even let fill before ripping higher. EUR swept buy-side and completely broke structure to the downside.

Classic HTF expansion. Do NOT try to short this dollar train, I'm staying aggressively long until we take out the daily buy-side liquidity above.

 

[JulianCraft]

[QUOTE="ArthurByte, post: 4123]EUR/USD is getting absolutely nuked because of the French political circus, and since EUR makes up like 57% of the DXY basket, the dollar has no choice but to moon when the Euro drops.[/QUOTE]

Chart astrology aside, this is the real answer. Europe is a complete fiscal disaster and their bond spreads are already starting to show the cracks.

The ugly part is that everyone's cheering this dollar rip like it's a sign of US strength. It's just the cleanest shirt in a dirty laundry basket. With our own inflation staying stubbornly high and the Fed trapped with practically zero room to cut (if anything they should still be hiking), this relentless dollar strength is just going to export inflation and choke out global liquidity. Enjoy the breakout, but a runaway DXY usually ends with something breaking hard in risk assets.

 

[LeoSterling]

Enjoy the breakout, but a runaway DXY usually ends with something breaking hard in risk assets.

@JulianCraft bro don't remind me... DXY pumping like this is absolute pain for crypto. My 50x alt longs just got completely rekt and SL hit on the dump. Need macro to calm down so we can finally send it again.

 

[EthanCole]

@LeoSterling man 50x alt longs? That's just asking to get farmed, bro.

Arthur's right about the HTF levels playing out, but honestly seeing guys getting rekt like that is why I stick to the 4H and Daily charts and just walk away from the screens. Chasing these headline-driven breakouts usually ends in tears if you're leveraged up like that. Just gotta sit on hands sometimes and wait for the dust to settle.