Technical Analyst, Saxo Bank Group
Summary: GBPUSD has broken below key support likely to unfold Double top pattern with potential to 1.12
USDJPY is set for higher levels after breaking key resistance at 137.85
EURUSD treading water above key support at 1.0480
Dollar Index above resistance at 105.50
Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team
GBPUSD closed below key support at around 1.1840 meaning the double top like pattern can unfold with potential down to 1.1146 but since it is not the best textbook Double top pattern it could hurt the down side performance. Look out for support at the Fibonacci projection levels 1.618 at 1.1466 and the 1.764 projection at 1.1377.
Trend is down but do expect GBPUSD could move back above the 1.1840 level before selling pressure returns. 200 daily Moving Average (SMA) will provide resistance.
If GBPUSD closes back above 1.2145 the short-term bearish picture has been demolished.
Medium-term picture. GBPUSD formed an Evening Doji top and reversal pattern just below the cloud. At no point did the weekly RSI close above 60 threshold i.e., still in negative sentiment supporting the bearish picture with down side potential to strong support at around 1.1146.
To reverse the bearish trend medium-term a close above 1.2446 is needed.
USDJPY is testing key strong resistance at 137.85 hovering around the 200 SMA. A close above 137.85 is likely to pave the way towards next strong resistance at around 142.25
A move below 135.35 is likely to spur a correction down to the 55 SMA and support at around 132.90. Positive RSI supports the bullish scenario but if USDJPY closes below 131.15
Medium-term USDJPY is well above the cloud. If RSI closes back above 60 threshold it will further add to the bullish USDJPY picture pointing to levels around strong resistance at 142.25
EURUSD is testing the 100 SMA. RSI is in negative sentiment strongly suggesting key support at around 1.0480 is likely to be tested shortly. A close below could fuel a sell-off down to around 1.0222 possibly dipping down to the 0.618 retracement at around 1.01. For the short-term downtrend picture to be reverse a close above 1.0805 is needed. That will also jeopardise the below mentioned medium-term reversal scenario.
The Shooting Star candle on the weekly chart signalled a top and reversal in EURUSD. The reversal will be confirmed by a close below 1.0480.
RSI is still in positive sentiment however, but if EURUSD closes a week below 1.0480 down trend has been confirmed. For EURUSD to resume uptrend a move above 1.0805 is needed. If that plays out EURUSD could challenge the Shooting star peak and potentially also the resistance at around 1.1177.
Dollar Index has broken above the resistance at 105.60 confirming the uptrend. Supported by positive RSI the Dollar Index is set for a move to the 200 SMA and the 0.786 retracement around 106.35.
However, there is no strong resistance until around 107.90
A close below 104 will reverse this bullish scenario.
Medium-term the Dollar Index formed a bottom and reversal pattern in January (Circled) bouncing from the lower part of the cloud, now back above the 55 weekly SMA. If RSI closes above 60 threshold it will further confirm the uptrend.
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.
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