By CountingPips.com
The US dollar declined in forex market trading on Monday after a strong run throughout the last two trading weeks. The American currency fell Monday against the euro, British pound sterling, Japanese yen, Swiss franc, Canadian dollar, Australian dollar and the New Zealand Kiwi dollar, according to market data at the close of the New York trading session. The major economic events of the week start on Tuesday and will provide ammunition to see whether the dollar uptrend continues, a consolidation phase begins or the dollar starts to shed some of its gains.
Quick Major Currency Pair Analysis:
Euro/US Dollar: The euro gained against the US dollar on Monday but ran into resistance at the 1.2900 area. To see more bullish momentum to the upside, we would have to see this pair get above the 1.2900 level as well as the previous support and resistance level at 1.2930 before testing the major 1.3000 threshold. Bearish action may find support at the 1.2875 level and likely the 1.2850.
British pound sterling/US dollar: This currency pair may see action on Tuesday with producer price and consumer price data out of United Kingdom. The GBP/USD reached as high as 1.5280 on Monday before pulling back but remained above the 1.5250 support level. A fall below this level would put the cable on a course to test the 1.5225 to 1.5200 area.
US dollar/Japanese yen: The dollar fell under the 102.50 level on Monday against the yen after closing above 103 on Friday for the first time since 2008. The 101.75 to the 102 area is in focus to see whether this pair finds support and resumes its uptrend or if a deeper correction takes place.
US dollar/Swiss franc: The 0.9650 level provided support on Monday for this currency pair despite a decrease for the day. This level looks to be important support for this pair as a close below would likely open the pair to decline under 0.9600 which has been a previous support and resistance level this year. Any sharp upward movement may be capped at 0.9750 in the short-term.
US dollar/Canadian dollar: The Canadian dollar rebounded on Monday after falling sharply last week and closed under the 1.0250 level. This is a very important level in the short-term to watch and see whether the bulls or the bears are driving this currency pair. Advancement above this level will bring into focus the 1.0275 point that has provided strong resistance over the last few months.
Australian dollar/US dollar: The Aussie bounced back Monday although gains were capped above 0.9800. Further bullishness would have to get above 0.9800 and the 0.9825 price levels to challenge the 0.9900 area. Support should be seen around 0.9750.
New Zealand dollar/US dollar: This pair on Monday fit resistance coming in around the 0.8175 level which had been a common previous support and resistance point. On the downside 0.8100 looks to be a strong support level while the 0.8175 all the way to the 0.8205 area could prove to provide key resistance.
Tuesday May 21 Major Economic Events:
Australia — conference Board leading indicators
Australia — reserve bank meeting minutes
New Zealand — reserve bank 2-yr inflation expectation
United Kingdom — consumer price index
United Kingdom — producer price index
Written by Zac Storella, CountingPips Forex Blog & Currency Pair Technical Analysis