The US dollar weakens on expectations the Fed will keep the cheap money coming to support the US economy. The WSJ Dollar Index falls 0.6% to levels not seen since mid 2019, and US currency weakens 0.8% against the euro and 0.5% against the yen. “The combination of falling real rates and rising risk assets has been a dominating force across markets over the past few months,” Goldman Sachs says. “We see a strong case for structural Dollar weakness, but shifting cross-asset correlations can affect performance among specific Dollar crosses.”
The AUD/USD has the potential to break above 0.7200 near term, which would clear the way for a run at 0.7300 in the weeks ahead, Westpac says. U.S. dollar weakness is playing a role, with the FOMC likely to lean dovish later this week and the U.S. economic recovery being set back by more states reintroducing virus restrictions. “But other positives are the RBA unconcerned about an AUD ‘broadly in line with its economic fundamentals,’ retail sales rebounding sharply, global equities remaining elevated, and China’s industrial recovery,” Westpac says. The AUD/USD is at 0.7149 early on Tuesday.
👉 USD is mixed against Asian currencies ahead of the FOMC meeting this week and a potential deal between Republicans and Democrats in the U.S. over a coronavirus relief bill. “The USD faces an uncertain time amid a growing focus on U.S. policy stimulus,” says Stephen Innes, chief global markets strategist at AxiCorp.
👉 Deflation is in the cards in Australia, with the annual pace dropping to -0.9% at the end of 2Q from growth of 2.2% at end-March, Westpac says.
👉 New Zealand has suspended its extradition treaty with Hong Kong after China imposed a national security law that the U.S. and other nations said substantially undermined the territory’s autonomy.
👉 Spot gold price showed no signs of fatigue as it surged $36.00 (+1.9%) to $1,942 an ounce, a record close. Spot silver price soared 8.1% to $24.58 an ounce, the highest level since August 2013.
👉 U.S. WTI crude oil futures (August) advanced a further 0.8% to $41.60 a barrel.
As we have observed earlier in the Currency Monitoring Chart, we discovered that NZD/USD lines are separated with the farthest distance.
The following is GBP/CHF looking at the daily chart:
The following is NZD/CAD looking at the daily chart:
INTRADAY MARKET INSIGHTS
USD/JPY Intraday:
Currently trading at JPY 105.60, the US Dollar is rebounding and stands above its 50-period moving average on a 30-minute chart at JPY 105.38. Moreover, the intraday RSI remains within its buying area between 50 and 70, and confirms the bullish bias. As a consequence, further advance is expected toward previous overlap at JPY 105.70 and toward horizontal resistance at JPY 105.95 in extension. A third target is set at previous overlap at JPY 106.15. Only a break below horizontal support at JPY 105.15 would invalidate this bullish view and call for a down move toward horizontal support at JPY 104.80 and toward JPY 104.55 in extension.
EUR/USD Intraday:
Towards 1.1810. The pair is challenging the overhead resistance at 1.1780 (the intraday high of yesterday). Support is provided by the ascending 20-period moving average. Upon reaching 1.1780, the pair should then target 1.1810 on the upside. The trailing key support has been raised to 1.1725.
AUD/USD Intraday:
Target 0.7180. The pair keeps trading within a bullish channel, while being supported by the ascending 20-period moving average. A break above the first upside target at 0.7160 (around the upper Bollinger band) would trigger a further advance toward 0.7180 on the upside. Only a return to the key support at 0.7130 would bring about a bearish reversal.
NZD/USD intraday:
Further upside. The pair posted a rebound after touching rising the 50-period moving average. The relative strength index has just landed on its neutrality level at 50 and is turning upward. To conclude, as long as 0.6651 is not broken, expect a further upside with targets at 0.6716 and 0.6731 in extension. On the other hand, a break below 0.6651 would open a path to 0.6625 on the downside.
GBP/USD Intraday:
Bullish bias above 1.2855. The pair continues to trade at levels around the ascending 20-period moving average. In case it crosses above the overhead resistance at 1.2900 (around the intraday high of yesterday) would call for a further rise toward 1.2930 on the upside. The trailing key support has been raised to 1.2855.
USD/CHF Intraday:
Key resistance at 0.9210. Although the pair posted a rebound from 0.9180, the upward potential is likely to be limited by the resistance at 0.9210. The relative strength index is around its neutrality level at 50, showing the lack of upward momentum for the prices. In this case, as long as the resistance level at 0.9210 is not surpassed, intraday bearish bias remains with down targets at 0.9180 and 0.9160 in extension. Alternatively, a break above 0.9210 would trigger another up leg with 0.9230 and 0.9260 as targets.
USD/CAD Intraday:
Downside prevails. The pair has recorded a series of lower tops and lower bottoms since July 24, confirming a bearish outlook. The downward momentum is further reinforced by both declining 20-period and 50-period moving averages. Hence, below 1.3375, look for a further decline with targets at 1.3320 and 1.3300 in extension. On the other hand, crossing above 1.3375 would trigger a technical rebound with 1.3400 and 1.3425 as targets.
EUR/JPY Intraday:
Rebound expected. The pair posted a rebound and returned the level above both 20-period and 50-period moving averages. The relative strength index stays above its neutrality level at 50, suggesting the lack of downward momentum for the pair. To conclude, unless the support level at 123.48 is violated, the pair should reach 124.28 and 124.49 on the upside. In an alternative scenario, a break below 123.48 would call for a return to 123.12 as a target.
EUR/GBP Intraday:
Eye 0.9067. The pair retreated with the bearish divergence signal from the relative strength index, suggesting the loss of upward momentum for the prices. Besides, the 20-period moving average is turning downward. In this case, as long as the resistance level at 0.9144 is not surpassed, intraday bearish bias remains with down targets at 0.9083 and 0.9067 in extension. On the other hand, a break above 0.9144 would turn the outlook to positive and bring a new challenge to 0.9171 as a target.
