Of course, the Dollar-Index closed just above the 112 treshold on Wednesday, but we were prepared for that. A quick rally to an intraday day high of 113.15 followed yesterday but DXY failed to close above the 113 level. Unfortunately, we only know afterwards whether the 113 will also represent a barrier in the long term.
Powell’s press conference was hawkish on Wednesday, which gave interest rates a boost again. At time of writing 10 years Treasury Yield is trading at 4.148% (vs 4.053%) and the 2 years even much higher at 4.744% (vs 4.524%). In particular, the 2 year rates seem to be slightly overshooting the target. At least I can't see from the comparatively dovish FOMC meeting statement that rate hikes of 75 basis points will continue.
Ultimately, however, the elevated interest rates with short maturities support the Dollar and that makes it even more difficult to hold shorts. In this respect, I can only recommend working with stops that you can afford. Nonetheless, I think the current Dollar level is too high and I remain looking for shorts (except against the Euro).
EURUSD -- 0.9802
Short squeezes are possible at any time but in general I lack the imagination for a greater recovery for now. From a technical perspective the currency pair is trading in bearish territory again below the red descending trend line and the 50 ema (0.9907). The next resistance can already be found at the mid Bollinger band (0.9835). Minor support is provided by the dotted green ascending trend line. Below yesterday’s lod (0.9730) longs should be closed.
GBPUSD -- 1.1211
The Bank of England's rate hike of 75 basis points (to 3.00%) yesterday did not help Sterling. Already trading clearly below the 50 ema into the close on Wednesday the currency pair lost more than two figures from opening to close on Thursday. A small recovery is of course possible today, but anything above the mid Bollinger band (1.1318) would surprise me a lot.
AUDUSD -- 0.6384
“In the larger picture, however, 0.6200 could be an interesting buy level (see weekly chart).” (Morning Call #107)
The 0.6200 treshold is still valid and I am sticking to my approach to long the Aussie against the Dollar. The upside potential is quite large, but it still makes sense to take profit rather quickly. The 0.6363 level looks like an important pivot point on the daily chart.
Good luck,
Sebbo