US Dollar vs. Euro, British Pound, Canadian Dollar – Pricing:
- of USD The index is struggling at key resistance levels, raising the prospect of a pullback.
- EUR/USD and GBP/USD Near key support levels.
- What are the select market prospects and key levels to watch USD pair?
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A recent struggle at a key resistance level has strengthened the view that the US dollar (DXY index) rally is losing momentum as recent data eases concerns that the US economy is recovering.
The U.S. Economic Surprise Index has rebounded from a two-year high, suggesting there may be plenty of optimism in the market. Rising disinflation, combined with early signs that the labor market may be cooling (the unemployment rate surged in August), has led to hopes of further tightening by the Fed. suppressed. Markets are now pricing in a more than 90% chance that the Fed will keep rates unchanged at its meeting later this month, and about a 60% chance that they won’t raise rates this year.
Moreover, China’s rapid pace of economic recovery in recent months has lifted sentiment, weighing on the dollar, at least for now. That said, the DXY index needs to fall below 102.50-103.00 for the uptrend to reverse. For more information, see our previous update published on August 22nd, “USD Looks Tired Ahead of Jackson Hole: EUR/USD, GBP/USD, USD/JPY Pricing”.
DXY Index (USD) Daily Chart
Chart created by Manish Jaradi using TradingView
On technical charts, short-term bullish pressure remains intact after the DXY index (USD index) bounced last week from a very strong convergence bottom at 102.50-1.0300, which includes the 89-period moving average and the lower end of the Ichimoku cloud. . 240 minute chart. As highlighted in a recent update, the index needs to break below support for the uptrend to change. “US Dollar Overtakes Powell to Lead. EUR/USD, AUD/USD, GBP/USD Pricing” (issued August 24).
DXY Index (USD) 240 minute chart
Chart created by Manish Jaradi using TradingView
Zoomed in, the index is struggling to break out of the tough wall of May’s high of 104.70, just above the 200-day moving average. A negative divergence in the daily chart (declining momentum as index levels level off) indicates that the index lacks the strength to break through the wall, increasing the risk of a pullback. For a more detailed discussion, see US Dollar Playing With Resistance After Powell: EUR/USD, GBP/USD, AUD/USD Price Action, 28 August.
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EUR/USD weekly chart
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EUR/USD: Waiting for low price confirmation
EUR/USD is near the fairly strong cushion of the 200-day MA, coinciding with the lower end of the ascending sloping channel and the 89-week MA. Despite the volatile price dynamics since early 2023, the pair has not hit a new low since late last year, suggesting the broader bias is still on the rise. However, a break below 1.0500-1.0600 could threaten the uptrend. On the other hand, the EUR/USD pair is seen as oversold, increasing the likelihood of a rally. For a rally to become material, it needs to break out of last week’s high of 1.0950.
GBP/USD daily chart
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GBPUSD: Closes Within Range
GBP/USD continues to weigh on key near-term resistance at August 10 highs of 1.2820 and is just below another barrier at xxx highs of xxx, strengthening the broader move. ing. For more information, see “Pound Resilience Masks Widespread Fatigue: GBP/USD, EUR/GBP, GBP/JPY Setup,” published Aug. 23. So far, the pair is above the very strong concentrated support at the end-June low of 1.2600. , just above the 200-day moving average. A break below the May low of 1.2300 would break the high-low-high-high sequence for the second half of 2022 and beyond. Until then, trends could go sideways at best.
USD/CAD weekly chart
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USD/CAD: Reaching Key Criteria
USD/CAD is testing key resistance at 1.3650, the Q2 2023 high. To keep the broader downward bias intact, the pair should be kept below this resistance value. This follows July’s rally from near-strong concentrated support at the 200- and 89-week moving averages. However, a break below last week’s low of 1.3500 would confirm that short-term upside pressure has abated.
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— By DailyFX.com Strategist Manish Jaradi
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