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US dollar presses further as commodity currencies stumble

  
Analysis, Forex

Softness in the risk trades adds another leg to the move

The loonie and New Zealand dollar are carving out fresh lows against the US dollar after the Nasdaq dive weighed on broader sentiment. The loonie is also navigating a possible US SPR release.
The driving force behind the dollar strength today is the re-nomination of Jerome Powell as Fed chair. That’s pushed US 2-year yields up 6.9 bps to 0.574% on expectations he will be more hawkish than Brainard would have been.
That belief will be tested in time but it fits nicely into the current theme of US dollar. It’s been a one-way march higher in the dollar for weeks as the market prices in divergence with the ECB, BOJ and others.
In terms of today’s move, NZD/USD has fallen to a fresh low since October 12 and a minor uptrend is going to be tested soon. Beyond that are the Sept and Aug lows.

Softness in the risk trades adds another leg to the move

Dollar moves a bit higher on Powell news. New 2021 high for the DXY.

  
Analysis, Forex

The  DXY is above the 50% of the range from the 2020 high.

The DXY index has moved up and traded at the highest level since July 2020.  The price has been ticking higher but has so far closed below the 50% of the trading ranges since 2020. Friday was the highest close in the current cycle. That close level came in at 96.06. That was just below the midpoint at 95.094.

The  DXY is above the 50% of the range from the 2020 high.

The move higher has taken the new 2021 high to 96.32 and more comfortably above the 50% level. Stay above the 50% is more bullish.
The US stocks are a bit higher with the pre-market futures implying:
  • Dow up 161 point
  • S&P up  up 19.25 points
  • NASDAQ up 83 points
Yields are higher with the 5 year up 6.6 basis points. It was up 4.6 basis points at the start of the North American session.
US yields

EURUSD continues the skim along the 2021 lows

  
Analysis, Forex

Friday the pair made another new low but quickly rebounded

The EURUSD is continuing “the skim” along the 2021 lows as the pair trades in a narrow 31 pip trading range for this Monday. The average range over the last 22 days is 68 pips. There is room to roam.
Today, the pair high has come in at 1.12898. That was just above the 61.8% retracement level of the range since 2020 at 1.12876, but that move above failed.  That level will be eyed for clues but finding sellers near that level keeps the sellers in control.
Friday the pair made another new low but quickly rebounded

Having said that the low today (1.12592) was near the swing low from Wednesday’s trading (1.1263). Many a bottom have been formed when the price can’t get to the bottom but stalls at an interim bottom like today’s.

The fact is the pair is “skimming”. The buyers and sellers are battling, BUT the sellers still have more control (the buyers are hoping for a bounce).  Watch the levels, but a move back below the 1.12633 could/should give the buyers more to worry about and the sellers more confidence.
EURUSD on the hourly chart

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Dollar sluggish as European trading gets underway

  
Analysis, Forex

Dollar among the laggards on the day

EUR/USD is up a little by 0.1% around 1.1335 as buyers are keeping a defense of the 1.1300 handle on the daily chart, maintaining some hope after the bounce from a low of 1.1265 in trading yesterday.
EUR/USD D1 18-11
That said, sellers are still in near-term control with the 100-hour moving average seen @ 1.1376 so there is much work to be done to invalidate the downside momentum.
But at least for now, buyers are trying to establish a base so there’s that.

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Dollar bulls take five to kick start the week

  
Analysis, Forex

The dollar gains from last week is cooling off a little

It was partly the case on Friday already and we’re seeing that extend to today with Treasuries also looking more bid as yields back away from the post-CPI highs as well.
The greenback is little changed across the board, but sitting slightly lower against the commodity currencies with USD/CAD building on the retreat from 1.2600 on Friday to 1.2525 currently while AUD/USD is up 0.3% to 0.7355.
The latter is working its way back towards a test of its 100-day moving average @ 0.7365 and that will be a key technical level to eye to start the week:
AUD/USD D1 15-11
The near-term chart also shows the 200-hour moving average nearby @ 0.7376 so that might offer some added resistance as sellers look to keep the downside momentum going.
Elsewhere, the dollar isn’t showing much poise with USD/JPY sticky around 113.90 while GBP/USD pared its early advance from 1.3440 to 1.3410-20 levels now.
Meanwhile, EUR/USD is barely changed and still keeping near its lowest levels since July last year with little firm support seen on the charts:
EUR/USD D1 15-11

EURUSD trades in a narrow range after making new 2021 lows

  
Analysis, Forex

Still below the 50% midpoint

The EURUSD is trading in a narrow 20 pip trading range as the week worked its way toward a close. This week saw the pair move higher on Monday and Tuesday into resistance between 1.1601 and 1.1611. On Wednesday the price moved sharply lower in response to the dollar buying after the CPI data, and in the process, cracked below the 50% midpoint of the move up from the March 2020 trading low at 1.14892. During yesterday’s trade the high price stayed below that midpoint level keeping the bears in control. The price closed near it’s lows at 1.1442.

Still below the 50% midpoint

In trading today, a new 2021 year low was reached for the third day in a row at 1.14354, but the price has since moved higher and trades at 1.1449, up on the day and near it’s high at 1.14554.
Looking at the daily chart, the next target hours looking toward was at 1.1424. The low today at 1.14354 is still short of that target.  On the topside the 50% midpoint remains a short term risk/bias defining level for buyers and sellers (at 1.14892). Stay below the level is more bearish. The 61.8% retracement 1.12876 cannot be ruled out as a downside target on further dollar buying.
Move above the 50% level and there could be additional upside probing with the 1.1512 to 1.15236 area as the next target (swing lows from October and earlier in November) above that and traders would start to look toward the 1.1601 to 1.1611 as targets on the daily chart.
Drilling down to the 5 minute chart below, there was a number of swing lows between 1.1453 and 1.14553 during yesterday’s trading (floor). Today, that area has slowed the rally’s (ceiling).
The 100 and 200 bar moving averages has seen price action above and below today as the market consolidates the sharp declines from Wednesday’s and Thursday’s trade.
The holding of that resistance level increases the areas importance going forward. Move above should see further upside probing. Stay below and the sellers remain in firm control.
On a move above the 50% midpoint remains the key target on the topside.
EURUSD on the five minute chart

GBPUSD trades to the lowest level since December 2020

  
Analysis, Forex

Price falls below the 1.3411

The price of the GBPUSD has fallen today below the November low of 1.34236 and the September low 1.3411. That takes pair to the lowest level since December 23, 2020. The low just reached 1.34056.
Price falls below the 1.3411
The move below the old lows opens the door for further downside momentum. A lower trendline on the daily chart cuts across at 1.3324. Other swing levels from November and December 2020 come in at 1.33117. The 38.2% retracement of the move up from the March 2020 low to the June 2021 high comes in at 1.31640. All are in play on a new leg lower in the move down.
What might ruin the bearish break?. Getting above the earlier November low at 1.34236 would disappoint sellers on the break. Also watch 1.34498. That was the low on Monday.
When a new multi-month low is made, traders expect more.  Now there may be some wiggle room- especially since the pair has been on a straight line down from the US morning high at 1.35384 (135 pips). However, you want the more recent lows to hold resistance.  So watch the 1.3450 level as a risk/bias defining level. Stay below keeps sellers in control. Move above and stay above, and disappointment on the failed break may start to creep into the market sentiment.
GBPUSD on the hourly char

Dollar keeps slightly firmer to start the session

  
Analysis, Forex

Dollar mostly higher so far on the day

The greenback is keeping in a firmer spot as we get things going in European morning trade, with USD/JPY inching back a little above 113.00 while EUR/USD has retreated from 1.1580 to a low of 1.1559 as the ranges stretch.
On the latter, sellers are looking to seize back near-term control now:
EUR/USD H1 10-11
The 100-hour moving average (red line) limited declines yesterday but that is giving way now though the pair is still largely caught in a relatively narrow range as a whole:
EUR/USD D1 10-11
Buyers are struggling to hold any firm push above 1.1600 in the past few days while sellers are finding it tough to keep pressure on daily support around 1.1525-29.
Elsewhere, cable is flat at 1.3553 while the loonie is holding a slight advance with USD/CAD down 0.1% to 1.2425. The antipodeans are among the laggards though with AUD/USD down to around 0.7355-60 while NZD/USD is down 0.3% near 0.7100.
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