<p style=““ class=“text-align-justify“>We are going back to a familiar theme in markets today, that being buy the dollar, sell everything else. This comes as we see traders digest the happenings this week and lean towards the possibility of a more hawkish/aggressive Fed. USD/JPY is now inching just above 135.00 as 10-year Treasury yields are threatening to move above the December highs of 3.90%:</p><p style=““ class=“text-align-justify“>Despite the dip buying in equities this week, <a target=“_blank“ href=“https://www.forexlive.com/news/are-the-cracks-finally-showing-up-in-the-market-20230217/“ target=“_blank“ rel=“follow“>which finally relented yesterday</a>, it looks to be a case where the bond market gets it right once again. Treasury yields have been trending higher through the week and have continued to pull higher after bond sellers drew the line when yields pushed up against the 200-day moving average (blue line).</p><p style=““ class=“text-align-justify“>The dollar is continuing to stay perky at the moment, keeping at the highs against the euro, yen, franc, aussie and kiwi while maintaining gains against the remainder of the major currencies. This comes as equities continue to stay pressured with S&P 500 futures still down 28 points, or 0.7%, currently.</p>

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

<p style=““ class=“text-align-justify“>You would think that with the BOC moving to the sidelines, the loonie would’ve struggled much more but against the dollar, it isn’t so much so the case as the greenback also experienced a weaker January mostly. But as the tides turn this week, we are seeing the pair bounce off a double-bottom pattern just below 1.3300 to run up against its 100-day moving average (red line) once again at 1.3515.</p><p style=““ class=“text-align-justify“>Buyers need to break above that and the 19 January high of 1.3520 in order to resume the upside push back towards 1.3700 again.</p><p style=““ class=“text-align-justify“>Otherwise, it might be a tough one from a technical perspective as the pair continues to trade in between both its 100 and 200-day (blue line) moving averages – with the November lows around 1.3225-35 also adding to key support for any look to the downside.</p><p style=““ class=“text-align-justify“>But for now, the price action mirrors that of most other dollar pairs as highlighted earlier in the day, that is we are seeing them run up against key technical levels but not quite breaking them just yet.</p>

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

<p>On the daily chart below, we can
see that the price has failed at the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> at 1681 as <a target=“_blank“ href=“https://www.forexlive.com/news/forexlive-americas-fx-news-wrap-bullard-finally-cracks-the-markets-resolve-20230216/“>Fed’s
Bullard</a> (hawkish, non-voter) signalled a possible 50 bps at the March meeting
and a higher terminal rate needed than the one projected in December 2022. </p><p>We can also see that the price
has been <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>diverging</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-relative-strength-index-rsi-20220426/“>RSI</a> at the resistance, so the
momentum was not there and since the fundamentals are now against further
upside, it’s unlikely to see higher highs. </p><p>On the 4 hour chart below, we can
see that the buyers will need to hold any of the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> levels with the 61.8% having more strength as
there’s also a previous resistance that now may have turned <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a>. Given the fundamentals though,
we should see sellers in control for now.</p><p>On the 1 hour chart below, we
have a textbook divergence setup with a king’s crown pattern. What you will
generally see is the price making a higher high that is divergent with the
momentum indicator, in this case the RSI. Then you need to wait for the price
to break the low giving the first signal of a change in trend. </p><p>Finally, you wait for the price
to pullback to a Fibonacci retracement level, in this case we can see
confluence of the low with the 38.2% level and the red long period <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
average</a>. This should be the entry for sellers. </p><p>The target is generally one of
the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-utilizing-fibonacci-extensions-20220422/“>Fibonacci
extension</a> levels, so either 127.2% or 161.8%. Here we can see that 161.8% has
more value as there’s also previous resistance on the left.</p>

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

<p>On the daily chart below, we can
see that the price is now getting closer to the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> zone at 1920. That will be the
last line of defence for the buyers as a break lower should give sellers
conviction that the sentiment is really turning. </p><p>The sentiment changed yesterday
as <a target=“_blank“ href=“https://www.forexlive.com/news/forexlive-americas-fx-news-wrap-bullard-finally-cracks-the-markets-resolve-20230216/“>Fed’s
Bullard</a> (hawkish, non-voter) acknowledged that he was open to the idea of
another 50 bps hike in February and he’s still open for it at the March meeting.
Moreover, he keeps his view of a higher terminal needed than what was projected
in December 2022. </p><p>A break lower of the 1920 support
will also turn the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> downward giving another signal of a change in trend. The target for the
buyers in case they manage to hold the line would be again the high at 2030 and
the first target for the sellers in case we see a break lower would be
1720.</p><p>In the 4
hour chart below, we can see that the price managed to break the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> but then went sideways as the
support at 1920 saw buyers defending the line. </p><p>We saw a
similar rangebound price action in other markets as there’s little conviction
from both sides on what’s next for the economy. It’s likely that we will see
the support holding today unless the <a target=“_blank“ href=“https://www.forexlive.com/EconomicCalendar“>Fed speakers today</a> sound very hawkish. </p><p>In the 1 hour chart, we can see
the recent catalysts and the absolute choppiness that’s been going on in the
markets for over a week now. The levels are set though: get below the 1920
support and we should see the sellers coming in aggressively, on the other
hand, get above the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> at 1970 and we should see the
buyers regaining strength. </p><p>On the fundamentals side, the
tides are turning. The moderation in <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ class=“terms__main-term“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa“ target=“_blank“>inflation</a> seems to be slowing. Economic
activity seems to have picked up. And the labour market remains secularly
strong. The market is sensing that the Fed will need to do more and the risk
that something will break at some point increases by the day. </p>

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

<p style=““ class=“text-align-justify“>More often than not, the kiwi tends to move in tandem with the aussie. But from the charts, this isn’t so much so the case this time around. While the aussie is still not breaking down just yet, the kiwi is right on the cusp against the dollar after having seen its attempt to break above 0.6500 run into a brick wall.</p><p style=““ class=“text-align-justify“>I want to say that in part, markets are needing to reprice RBA expectations a little but to keep things simple, it’s all about the technicals at the end of the day.</p><p style=““ class=“text-align-justify“>And in the case of NZD/USD, the rejection at 0.6500 has since seen the pair push lower and is now reaching a potential breaking point for the kiwi to the downside.</p><p style=““ class=“text-align-justify“>The pair is now running into the January lows of 0.6190-00 and a break below that could set off the next downside leg. That said, sellers should not get too comfortable just yet as there are still some additional layers of support to work through.</p><p style=““ class=“text-align-justify“>The confluence of the 100 (red line) and 200-day (blue line) moving averages at 0.6158 and 0.6185 respectively will also be key levels to be mindful of, alongside the 38.2 Fib retracement level of the upswing since October at 0.6145.</p><p style=““ class=“text-align-justify“>I would argue that sellers will need to firmly break those levels as well to really vindicate a potential drop next towards 0.6000 again.</p>

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