Technical Analyst, Saxo Bank Group
Summary: Dollar Index dancing around key support at 103.20.
EURUSD in and uptrend closing in on key resistance at 1.08
USDJPY downtrend continues could be looking at 126 level
GBPUSD seems strong. Can it break resistance and move to 1.27?
The Dollar Index closed yesterday below key support at 103.20. Despite this lower close the RSI is still showing divergence i.e., not supporting the lower level. RSI closing below its rising trendline will be a strong indication for further downside on the Dollar Index, because trend is down short- and medium-term.
For a short-term rebound a close above 105.50 is needed but upside seems limited. The medium-term 55 daily SMA is declining and close to break below the 200 daily SMA supporting the underlying bearish trend.
Next support is at around 101.30.
Weekly chart strongly indicates we will see a test of 101.30 support. The Dollar Index is trading below 55 weekly SMA, Bollinger bands are still expanding and RSI is showing negative sentiment.
If the Index closes below 101.30 a move to test the 200 weekly SMA is in the cards.
EURUSD uptrend seems a bit stretched short-term. The higher daily close has not pushed the RSI to a higher level. RSI has even failed to break the falling trend line and is still showing divergence. Resistance at 1.08 could be a struggle to break at first attempt. But if EURUSD closes above and RSI closes above its falling trendline there is more upside.
A daily close below 1.0480 could see EURUSD drop back to around the 200 daily SMA. Key strong support at around 1.0240.
USDJPY is trading in a falling channel pattern having failed a couple of attempts to close above the upper falling trendline.
The bounce from support at 130.38 and the divergence on RSI suggests a correction but if RSI closes below its rising trend line and USDJPY closes below 130.38 a move to support at around 126.30 is likely.
If buyers manage to lift USDJPY to close above the upper falling trendline there is strong resistance at around 138.
Weekly chart medium-term trend is down but 130.38 is still holding on. RSI below 40 showing negative sentiment. USDJPY seems set for lower levels. Support at 126.3 is key.
RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Fixed Income Strategy
Quarterly Outlook
Head of Commodity Strategy
Disclaimer
The Saxo Bank 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. This content is not intended to and does not change or expand on the execution-only service. 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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-gb/legal/disclaimer/saxo-disclaimer)