Technical Analyst, Saxo Bank
EURUSD was rejected at parity, and it could be a long time before it sees it again. EURUSD has resumed downtrend currently testing 0.786 Fibonacci retracement of early October correction (where EURUSD tested parity) and is likely to drop below previous lows at around 0.9535. A likely short-term target is the falling trendline test and the 1.382 projection at 0.9358. RSI is showing negative sentiment and is at the time of writing back below 40 indicating further downside.
To reverse this scenario a close above parity is needed.
Medium-term (as mentioned in the Q4 Outlook) there is not strong support before around 0.90.
The Dollar Index is testing 0.786 retracement of the correction which bounced off the short-term rising trendline. RSI back above 60 and no divergence indicates higher levels going into October and November.
Medium-term the Dollar Index is about to surpass the 1.618 projection – again – at 113.10 eyeing the 1.764 projection at 115.26.
RSI value currently at 81.10 is getting close to its all-time peak from March 2015 at 82.78. However, there is no divergence indicating higher levels on the Index going into the end of 2022 and into 2023, even it is hit by a larger correction.
If the current steep uptrend is to become as long as the low to high of the sideways market from 2015 to 2022 the Dollar Index could reach 118.75-120. Illustrated by the two vertical arrows.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.