Dollar feeling out post-Powell resistance

John Hardy

Head of FX Strategy
John Hardy joined Saxo Bank in 2002 and has been Head of FX Strategy since October 2007. He focuses on delivering strategies and analyses in the currency market as defined by fundamentals, changes in macroeconomic themes, and technical developments.

Please see today's FX Board PDF (linked here) for the latest Notes of Interest, Trend and Trend Heat readings, as well as a few thoughts on key chart developments below.

Charts: EURUSD

EURUSD has teased the key range support near 1.2200 and is trading just below it as of this writing; the next major zone of interest lower is the former high on the way up around 1.2095. This weekend's Italian election looks like the next sentiment test for the euro, which needs to pick up a bid well ahead of 1.2000 to avoid facing a more major challenge to the longer term uptrend. 

It wouldn't take much to reassure bears here... a smart reversal of this break attempt, for example, given the chart structure.

EURJPY (weekly)

EURJPY has broken down below range lows and the 200-day moving average, possibly opening up for considerable progression lower if the move holds. The weekly Ichimoku rises toward the 127.50-plus area over the next couple of weeks and could be a bearish target.

GBPUSD

Cable is in a steep retreat in the wake of fresh Brexit uncertainties hitting sterling just as the greenback is also posting notable strength. The plunge through the 1.3855 area local pivot has taken the action lower (note the 200-day moving average in GBPJPY giving way as this was written as a possible accelerant). 

The more major challenge to the trend is not until the 1.3600-50 zone, the major resistance level on the way up.

AUDUSD

AUDUSD is at pivotal levels with a break of 0.77500-75 the downside blow needed to set a more bearish outlook in motion. Failing that, the range is the range.

You can access both of our platforms from a single Saxo account.