Over the past few days, we have been talking about bond markets, soaring yields, the great reflation trade, and other key developments moving markets.
Today, our focus will be directed towards the G10 space and our weapon of choice…technical analysis.
Dollar rebound or dead cat bounce?
Last Friday, we questioned whether the Dollar was experiencing a dead cat bounce.
After flirting around the 50-day simple moving average (SMA) for weeks, the Dollar Index pushed higher thanks to rising US Treasury yields. Prices are trading marginally below the 91.00 level while the MACD is flat. Interestingly, the Relative Strength Index (RSI) is venturing towards 70.00 – overbought territory. A solid close above 91.00 could open a path towards 91.60 and 92.00. A decline back below 90.50 may invite a selloff towards 90.00 and 89.30.
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Pound experiencing a technical pullback?
Sterling collapsed like a house of cards last week after punching above 1.4200 for the first time since April 2018.
It looks like a pullback could be in play but this will depend on how prices behave below 1.4000. Sustained weakness under this resistance could encourage a steeper decline towards 1.3830 and 1.3760. Should 1.4200 prove to be unreliable resistance, prices may rebound towards 1.4140 and 1.4200.
Euro poised for further downside
A lot is going on with the EURUSD.
Prices are trading below the 50 SMA but above the 100 SMA. The MACD is flat but the recent selloff suggests another decline on the horizon. A solid daily close below 1.2050 could trigger a decline towards 1.2000 and 1.9050. For bulls to jump back into the game, a strong daily close above 1.2130 will be required.
AUDUSD respects bullish channel
As the title says, the AUDUSD remains in a bullish channel on the daily timeframe. However, prices have cut below the previous higher low of 0.7724, offering an opportunity for bears to re-enter the scene. If prices are unable to break above 0.7820, this may result in a decline towards 0.7660 and 0.7563.
EURGBP capped under 0.8700?
Is the EURGBP in the process of a technical rebound or a dead cat bounce? After rebounding from the 0.8538 level last week, prices failed to secure a daily close above 0.8700.
Where the EURGBP trades in the medium to long term may depend on whether the current range can be broken. Sustained weakness under 0.8700 may trigger a decline towards 0.8596 and 0.8538. Should bulls take prices back above 0.8700, the next key level of interest may be found around 0.8780.
USDJPY eyes 107.00
The USDJPY is firmly bullish on the daily charts. Bulls remain in the control as long as the 105.838 higher low proves to be reliable support. Prices are trading above the 20 Simple Moving Average (SMA) while the MACD trades to the upside. A weaker Dollar or intraday breakout above 106.80 could elevate the USDJPY towards 107.00 in the week ahead.
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