Today was jampacked with key economic data from major economies and speeches from central bank officials.
Overall market sentiment was shaky as slowing growth in China and the rapid spread of the Delta variant fanned fears over the global economic recovery. This caution was reflected across global equity markets with Wallstreet opening lower as investors turned to Federal Reserve Chairman Powell’s testimony.
In the commodity markets, oil extended losses as markets assessed the possibility of higher crude supply from OPEC+ following reports that Saudi Arabia and the United Arab Emirates reached a compromise.
Back in the United Kingdom, the Pound received a boost against most major currencies thanks to a hawkish shift in tone from two BoE members.
Interestingly, the greenback appreciated across the board despite Jerome Powell’s dovish presence. Dollar bulls seem to have found support from the US weekly jobless claims data which hit a fresh pandemic low.
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Dollar Index breakout on the horizon?
Let’s be honest, the dollar has been choppy over the past few days.
It has almost become a battleground for bulls and bears thanks to the conflicting forces. Mixed messages from Fed officials, repeated signs of rising inflationary pressures, concerns over the Delta variant and a dovish Powell among other themes continue to influence the dollar.
Looking at the technical picture, the Dollar Index (DXY) remains in an uptrend however there seems to be support at 92.00 and resistance at 92.85. While a breakout could be on the horizon, it may take a directional catalyst for such to materialise.
Pound struggles against stronger dollar
Despite the hawkish shift in tone from BoE members Ramsdale and Saunders, the GBPUSD remains under pressure on the daily charts.
Prices are trading below the 20, 50 and 100-day Simple Moving Average while the MACD trades to the downside. A solid breakdown below 1.3750 could signal a move towards 1.3670. Should 1.3750 prove to be reliable support, a rebound back towards 1.3900 could be on the cards.
EURUSD presses against 1.1800
The EURUSD remains bearish on the daily charts as there have been consistently lower lows and lower highs. Prices are well below 50, 100 and 200-day Simple Moving Average while the MACD trades below 0. A solid daily close below 1.1800 could open a path towards 1.1782 and 1.1704, respectively. If the 1.1800-1.1770 region offers reliable support, the EURUSD could experience a rebound back towards 1.1900.
G10 currencies bow to Yen
The Japanese Yen has appreciated against every single G10 currency today thanks to the risk-off mood.
As investors maintain a distance from riskier assets amid fears over the global economic recovery, this could be good news for safe-haven currencies like the Yen moving forward. Looking at the technical picture, the USDJPY is struggling to keep above the 109.70 level. A breakdown below this point could trigger a decline towards 109.30 and 108.70.
EURGBP pressured below 0.8600
The currency pair remains under pressure below the 0.8600 level. Interestingly this is roughly where the 50 and 100-day SMA reside. A move back below 0.8520 is likely to open a path towards 0.8472.
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