Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Technical Update - Dollar Index, EURUSD & GBPUSD
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary:
Dollar Index looks heavy being rejected at key resistance, down trend set to continue
EURUSD testing key resistance at 1.08. Seems set for higher levels
GBPUSD range bound having put the Top and Reversal pattern on hold. Above 1.2445 it is cancelled.
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Today's Market Quick Take from the Saxo Strategy Team
Today's Market Quick Take from the Saxo Strategy Team
Dollar Index is in a downtrend short- and medium-term. After being rejected at the 0.382 retracement (weekly chart) the correction seems to be over and the Dollar Index is set to move lower.
Short-term (Daily chart) the Dollar Index is currently testing the 0.6189 retracement of the February uptrend at 102.66. RSI is still holding on above 40 threshold i.e., still showing positive sentiment. If Dollar Index closes below the cloud span i.e., below 103.92 RSI will turn to negative sentiment indicating likely new lows in the Dollar Index.
Weekly Relative Strength Index (RSI) is negative and indicating lower Dollar Index levels. If the January trough at 100.68 is taken out the Dollar Index could drop to the 0.618 retracement at 98.94 which is within few cents from the 1.382 projection of the February correction at 98.70.
However, there is not strong support until around 97.45 which is also the 1.618 projection.
The 200 weekly Moving Average will offer some support.
For the Dollar Index to reverse this bearish picture a move back above 105.89 is needed. Resistance at around 107.70.
EURUSD has been range bound for the past couple of weeks now testing the upper range and resistance at 1.08. A daily close above will push the RSI above 60 and in to positive sentiment indicating higher EURUSD levels. If that plays out EURUSD is likely to test February peak at around 1.1032 possibly move to strong resistance at around 1.1170
Weekly RSI is bullish and with no divergence indicating higher levels for EURUSD. A move to 1.1170 seems likely
For EURUSD to reverse the medium-term uptrend a close below 1.0525 is needed.
GBPUSD has recovered from break of the key support area around 1.1840 that could have resulted in a massive sell-off. After closing above the 55 daily MA and the short-term falling trendline the possible Double top and reversal scenario is on pause and likely to be cancelled.
RSI is positive suggesting GBPUSD to test strong resistance at around 1.2445. A close above is likely to extend uptrend to resistance at around 1.2667 which around the 1.382 projection of the top to bottom range distance.
Short-term if GBPUSD is being rejected at 1.2445 it could be caught in the range for a prolonged time. A move below 1.20 will likely test the lower band at around 1.1840. If GBPUSD closes below the range i.e., below 1.1840 bear trend resumes.
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