It has not been a great day for the dollar. The currency has entered August on a shaky note, struggling to nurse the wounds inflicted by the Federal Reserve’s dovish stance last week. With the greenback weakening against almost every single G10 major this afternoon and the Dollar Index (DXY) wobbling around the 92.00 level, bears are certainly in the vicinity.
Fundamentally, the dollar remains gripped by a stubbornly dovish Federal Reserve and may experience further headwinds if the central bank sticks to the view that rate rises are “a ways away”. However, with US inflation already at a 13 year high and the US economy rebounding, this could provide an opportunity for hawks to enter the scene. It may be wise to keep a close eye on how the dollar reacts to the US jobs report on Friday.
Back to the technicals, the DXY remains under pressure on the daily charts. A strong daily close below 92.00 could open the doors towards 91.50 and 91.30 – levels where the 100-day and 200-day Simple Moving Average (SMA) reside. Should 92.00 prove to be reliable support, the DXY could rebound back towards 92.50 and 93.19, respectively.
EURUSD breakout on the horizon?
Euro bulls still have some way to go before reclaiming control on the daily charts. Despite the latest rebound, the EURUSD remains below the 50, 100, and 200-day SMA while the MACD trades below zero. A solid breakout and daily close above 1.1900 could open the doors towards 1.1940 and 1.2000. It will be interesting to see whether bulls have what it takes to conquer 1.2000 considering this is where the 200-day SMA resides.
On the flip side, if 1.1900 proves to be a tough nut to crack, a decline back towards 1.1830 and 1.1800 could be on the cards.
GBPUSD balances above 1.3900
Pound bulls were on a roll last week thanks to falling Covid-19 cases, the reopening of the economy, and positive Brexit-related developments. Despite the healthy buying sentiment witnessed last week, Sterling has weakened against most G10 currencies today.
Pound bulls could be taking a break ahead of the Bank of England policy meeting on Thursday. In the meantime, the GBPUSD looks exhausted on the daily charts with prices hovering above 1.3900 as of writing. Given how this remains below the 50 and 100-day SMA, prices may descend lower in the near term. A breakdown below 1.3900 is seen opening the doors towards 1.3786 and 1.3750 which is just above the 200-day SMA. For bulls to grasp further control, a strong move above 1.4000 needs be to secured.
USDJPY presses against 109.30
A classic breakout setup is in the making on the USDJPY with 109.30 acting as the trigger. Should bears secure a solid daily close below 109.30, the currency pair could descend towards 108.70 and 108.30, respectively.
AUDUSD: Trend is your friend
The sub-title says it all for the AUDUSD. There have been consistently lower lows and lower highs while the MACD trades to the downside. Technicals swing in favour of bears, however, a technical bounce towards 0.7507 could be around the corner if prices push back above 0.7400.
Commodity spotlight – Gold
Gold remains pulled and tugged by conflicting forces. This continues to be reflected in the choppy price action with prices back below the 200-day SMA. It looks the precious metal needs a fresh directional catalyst to break out of the current range. Such could come in the form of the pending US jobs report on Friday. Until then, it may be the same old story for gold with support around $1792 and resistance at $1830.