DOLLAR SWINGS ON MACROS

EUR/USD

The EUR/USD pair began the week with a slight rise, finding support around 1.0830 after a strong rally to 1.1275. Reduced selling pressure is evident, with a potential upward correction on the horizon. Conversely, a downside reversal could find support at 1.0830. Despite the possibility of a rebound, the short-term outlook is uncertain unless the pair surpasses 1.1000, as it currently maintains a downtrend.

 

The EUR/USD pair is hovering around 1.0886, marking a multi-week low, driven by the US dollar’s surge due to heightened risk aversion among investors. Negative developments in China, including a major private developer missing a bond payment and seeking delays in transactions, triggered panic. The People’s Bank of China’s efforts to stabilize the yuan added to market concerns. If the pair drops below 1.0880, it might target 1.0820. Technical indicators align with these potential trends.

 

USD/JPY

The USD/JPY is currently trading at 145.73. Breakthrough could lead to a continuation towards 147.28, while a double top might trigger a reversal. The strengthening dollar is at a crucial juncture. The euro is weakening, and the yen is strengthening against the dollar. The movement of Treasury yields, influenced by the Federal Reserve’s position and strong U.S. data, could strengthen the dollar. Positive economic indicators and hawkish statements are bolstering the dollar. The recent release of the US Federal Reserve’s meeting minutes, hinting at potential future interest rate hikes, favoured the US dollar and put pressure on other currencies. USD/JPY’s uptrend faces resistance due to central bank policies. If USD/JPY surpasses 146.5, intervention discussions might arise. Changes in the Bank of Japan’s strategy could impact trends. The BoJ’s lenient stance on lower inflation sets it apart from other central banks.

 DOLLAR OUTLOOK

The dollar retreated from recent 10-week highs as global risk sentiment rebounded due to a surge in U.S. government bond yields and concerns about the weakening Chinese economy. Rising U.S. Treasury yields, especially the 10-year benchmark, have boosted the dollar recently. However, there’s now a pause, and the dollar index, measuring it against other developed currencies, was down to 103.06 from Friday’s 10-week peak of 103.68. However, cross-over above psychological 104 resistance could lead to an uptrend leading to targets at 104.60 and 105.45. Below 102.77, retracement up to 101 is possible.

 

The dollar also weakened against the yen and European currencies. The Chinese yuan saw a brief recovery due to Beijing’s efforts, but concerns about economic growth and rising U.S. yields continued to affect it. The Australian dollar also rebounded on improved risk appetite. The focus now is on Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium, which could impact the dollar’s outlook.

For more insights and analysis, visit Uptrendpicks.com

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