Technical Analyst, Saxo Bank
Summary: USD weakness seems to have come to and end. Reversal patterns in EURUSD and Dollar Index
USDJPY bouncing off strong support area
However, on weekly chart EURUSD came last week within few pips touching the 0.786 retracement at 1.1057 before collapsing forming a Shooting star like candle. A Shooting star indicates a top and reversal. (Shooting star is a candle with a tall upper shadow but no lower shadow. A body that is fairly small at the lower end of the candle)
RSI is still bullish with no divergence which tells us that higher levels cannot be ruled out. A move above last week’s peak at 1.1033 will most likely push EURUSD to 1.1170 - 1.12.
If EURUSD closes below 1.0480 the medium-term trend has reversed to bearish.
USDJPY jumped Monday morning to test minor resistance at around 132.87 and the 55 daily SMA. The Jump came after USDJPY had shown RSI divergence for weeks. A surge4 Friday off the upper trendline in the falling channel have laid the foundation for a bigger bounce.
RSI is still be bearish however, and needs to close above 60 to reversal that. If USDJPY closes above 133 there is short-term potential to 0.382 retracement and the 200 daily SMA. Strong resistnace at around 137.85.
Medium-term the support area at 126.30- 126.85 seems to be too strong for Bears to push USDJPY below. Currently hovering around the 55 weekly SMA which is rising there could be further upside despite RSI being negative.
Some resistnace at around 134.77.
The Dollar Index (DXY) jumped back above previous resistance at 101.30 AND back above 103.20. Currently testing the 55 daily SMA and close to the upper falling trendline. A close above is likely to fuel a rally up to around the 200 daily SMA and the 0.786 retracement od the falling channel at 106.35. Resistance at around 105.00-105.50.
Weekly chart: Thee weeks in a row the Dollar Index has closed above key support at 101.30 and has formed an Evening Doji morning. (Circled). It indicates of a bottom and reversal.
A reversal that is likely to lift the Index back above the 55 weekly SMA to test the 105.50 resistance area .
A close below 101.30 and the Dollar Index will resume and extend the down trend
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
Market Strategist
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.
Peter Siks,
Investment Coach
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
Jessica Amir,
Market Strategist
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.
Mads Eberhardt,
Cryptocurrency Analyst