Archiv für den Monat: Mai 2023

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ForexLive European FX news wrap: Dollar regains poise on risk retreat 0 (0)

Headlines:

Markets:

  • USD and JPY lead, AUD lags on the day
  • European equities lower; S&P 500 futures down 0.4%
  • US 10-year yields down 5 bps to 3.646%
  • Gold flat at $1,959.58
  • WTI crude down 2.6% to $67.67
  • Bitcoin down 2.4% to $27,121

It was an eventful session as there were a couple of broad market themes playing out in European trading today.

For one, the dollar resumed its bid from last week as it advanced across the board despite falling yields once again (it was the opposite yesterday). Poor China data from Asia trading earlier sort of set the tone for a more risk-off mood in Europe and that was certainly the case with the greenback gaining ground alongside the yen.

Equities fell as such and even with lower inflation figures in France, Italy, and German states, it wasn’t enough to turn the tide.

Instead, it was a typical flight to safety with commodity currencies and oil being offered. Despite a stronger dollar, gold held its ground as it seems like haven bids are helping out.

Going back to FX, EUR/USD declined from 1.0710 to 1.0660 before holding around 1.0680 now. Meanwhile, GBP/USD also fell from 1.2390 to 1.2350 with USD/CHF even moving up by 0.5% to clip the 0.9100 level on the day.

But it was against the commodity currencies where the dollar did most of its work, with AUD/USD down 0.6% to 0.6475 and NZD/USD down 0.6% as well to test the 0.6000 mark. Both pairs are down to their lowest levels for the year, threatening a further downside break.

WTI crude is keeping down by nearly 3% on the day as China’s worries weigh on demand prospects, testing waters below $68.

Month-end trading is also in focus, so just keep an eye out ahead of the London fix later in case we do get another injection of volatility.

This article was written by Justin Low at www.forexlive.com.

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USDCHF Technical Analysis 0 (0)

On the
daily chart below, we can see that USDCHF has recently broke out of the major
downward trendline and has
now extended towards the 0.91 handle. The moving averages have
crossed to the upside confirming the change in trend. The rally has come amid
strong US economic data in May that have made the market to reprice interest
rates expectations on the hawkish side. In fact, the market is now giving a 65% probability for a 25
bps hike at the June meeting. This can all change with the next NFP and CPI
reports of course, so traders will be very attentive to those two releases.

USDCHF Technical Analysis

On the 4
hour chart below, we can see that USDCHF has recently bounced again on the
upward trendline, as that has been a strong support since the price bottomed in
early May, and kept offering buyers good entry points. We can notice that now
the price is diverging with the
MACD right
when it approaches the resistance at 0.91.
This is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we may get a pullback either to the broken resistance turned support at
0.9070 or even better the upward trendline.

On the 1
hour chart below, we can see that we have a strong support zone at the 0.9070
level. In case USDCHF pulls back, the buyers will be leaning on that level with
a defined risk just below it and target the breakout of the 0.91 handle for new
highs afterwards. The sellers, on the other hand, should defend the 0.91 handle
here targeting new lower lows and thus offer the pullback to the support zone.

As
mentioned above, the trend is bullish, so the sellers will have much more work
to do before getting back the control. In fact, only a break below the upward
trendline would switch the bias to the downside and see the sellers piling in
more aggressively.

This article was written by ForexLive at www.forexlive.com.

Go to Forexlive