Yesterdays’s green candle shows upside pressure in the dollar index (DXY) but the 104 treshold remains a barrier for now. Low-conviction protagonists are better off keeping their positions small and tight at current eratic trading between 102.50 support and 104.00 resistance. Nonetheless, I think a breakout to the upside is the more likely dollar scenario in the medium term. I can't be bullish on the euro in particular, even though I have already read targets of 1.1500 for the rest of the year. But more on that in a moment.
EURUSD -- 1.0707
It is all about the 50 ema (1.0681) again and bulls need this important average line to hold. Only above the resistance zone between 1.0787/00 and the upper Bollinger band (1.0808) it become critical again for bears. And as we know, a single green candle can be enough for such a movement. In the big picture, however, I stick to a rather bearish outlook for the euro. That includes a retest of the 2022 lows.
Admittedly, Ms. Lagarde will continue to raise interest rates in the eurozone to narrow the gap between inflation (8.50% YoY) and the policy rate (3.00%). But this interest rate policy, which is only slowly becoming more restrictive (FED policy rate 4.75%, US CPI 6.40% YoY), is being flanked by ongoing massive purchases of (peripheral) government bonds. To what extent this implicit state financing and money printing can boost the euro in the medium and long term is not clear to me, at least at this point in time.
GBPUSD -- 1.2064
The big psychological 1.2000 level remains a good support for now. Together with the rejection of the 1.2400 resistance early February the medium term range is set. However, I would rather look for shorts towards 1.2200/25 than buy sterling at current spot. The 200 dma (1.1943) could have a magnetic effect and is just too close for me here.
USDCHF -- 0.9217
It's been a while since the last update on this currency pair (25jan), but as you can see the spot rate has not moved much in the mean time. The dollar is still consolidating below the 50 ema (0.9285) and one might get the feeling that it only needs a small catalyst for a breakout to the upside. But most of the time it's not that easy. In this respect, I rather expect another test of the downside (0.90xx).
Good luck and Happy carnival days!
Sebbo