Technical Update - Volatile EURUSD and Dollar Index without direction. GBPUSD breaking bearish? Technical Update - Volatile EURUSD and Dollar Index without direction. GBPUSD breaking bearish? Technical Update - Volatile EURUSD and Dollar Index without direction. GBPUSD breaking bearish?

Technical Update - Volatile EURUSD and Dollar Index without direction. GBPUSD breaking bearish?

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

  • EURUSD's volatile movements around key Fibonacci levels and Moving Averages are pivotal in understanding why the cross is directionless on the short-term
    EURUSD could be stuck range bound between 1.08 and 1.070 for the foreseeable future with decreasing volatility


  • GBP/USD (Cable) is trading below a key support at 1.26 and below the 200 DMA, with a bearish sentiment indicated by the RSI. Closing price today could be crucial for the trend direction

  • The Dollar Index is experiencing volatility influenced by conflicting moving averages, with its direction uncertain as it approaches key resistance levels


EURUSD
is experiencing considerable volatility, partly due to conflicting signals from its daily moving averages (DMAs). With the 21 DMA rising, the 55 DMA declining, the 100 DMA rising, and the 200 DMA almost flat, the currency pair lacks a clear directional trend across short-, medium-, and long-term perspectives.

Fibonacci retracement levels are key in understanding EURUSD's recent movements:

  1. In early March, EURUSD reached the 0.618 Fibonacci level at 1.0970 and then retracted
  2. It then declined to the 0.50 retracement of the mid-February to mid-March uptrend and the 0.786 retracement of the early March uptrend at 1.0835
  3. The pair rebounded from 1.0835, approaching the 0.786 retracement at 1.0949 but closed below the 0.618 level at 1.0925
  4. EURUSD is now testing the 0.618 retracement of the mid-February to mid-March uptrend at 1.0804

A close below 1.0795 could lead to further declines toward the 0.786 level at 1.0756. EURUSD is nearing strong support at the 0.618 retracement around 1.08. A rebound from this level and a break above 1.0945 could signal a resumption of the uptrend, supported by positive sentiment indicated by the RSI.
Conversely, a close below 1.0795, potentially pushing the RSI below 40, would suggest a bearish outlook, possibly targeting the February lows around 1.07

The medium-term weekly chart for EURUSD suggests the formation of a triangle-like pattern, indicating potential decreasing volatility as the pair approaches the apex (where the two lines meet, setting the stage for a breakout

Source all charts and data: Saxo Group

At the time of writing, GBPUSD (Cable) is trading below the 0.786 Fibonacci retracement and key support level at 1.26, also positioned below the 200-day moving average (DMA).
The RSI indicator is under the 40 threshold, suggesting furhter bearish movement

If GBPUSD closes the day below 1.26, it may lead to further declines towards 1.25.

To counter this bearish trend, GBP/USD needs to close above the Ichimoku Cloud (shaded area), specifically above 1.2666, which would signify a potential shift in momentum and a possible trend reversal.

The Dollar Index is experiencing quite a lot of volatility, partly due to the mixed signals from its moving averages. The 21 DMA and 100 DMA are declining, the 55 DMA is on the rise, and the 200 DMA remains nearly flat, illustrating the lack of a clear trend.

The index is nearing a critical resistance level at around 104.24, which is closely aligned with the 0.786 Fibonacci retracement level at 104.32. A daily close above these levels could propel the index towards a strong resistance at 105.83, with an intermediate resistance near 104.88.

Should the Dollar Index get rejected at 104.24-104.32 area, it's likely to enter a phase of range-bound trading between 104.25 and 102.55 for an extended period

Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.