I was not quite sure about the dollar in the last newsletter (“I am unsure whether the dollar has really left the bottom with this (…)”), but the strength of the reversal surprised me. Two days later, the 105 support zone (Dollar Index = DXY) was already history and it finally went down to 103.48 yesterday. An important difference compared to last year is obviously that “risk off” no longer automatically leads to dollar buying. Especially not, of course, when the supposed trigger could be the USA (Silicon Valley Bank) itself.
The issue becomes even more complex when bond yields in the US fall (flight to quality) and interest rate differentials narrow again. The next Fed meeting is on 22 March and the first analysts are already switching camps away from the next rate hike to the rate cut.
This afternoon, the latest US CPI figures (6% exp YoY) will be released, and the market is currently likely to react sensitively to slight upward or downward deviations. In this respect, it makes sense to hold back for the time being. From a technical perspective, however, the bullish Dollar picture is over for now. The DXY rejected the yearly highs and has corrected sharply. I think a test of the major 102/101 support zone is the more likely scenario at this point. But you have to stay flexible in this market as we noticed last week.
EURUSD -- 1.0701
The currency pair is trading above the 50 ema (1.0654). This is bad for bears. Next resistance can be found at the upper Bollinger band (1.0740) and the 1.0787/1.0800 resistance zone. A quick move below the mid Bollinger band (1.0633) would change the bullish picture again.
USDCHF -- 0.9127
Unfortunately, the currency pair did not go higher than 0.9440 and the 200-day line was not reached. Now the currency pair is trading at yearly lows again and there is a risk that the 0.9000 level will not hold this time. Possible dollar longs should therefore be closely monitored in any case.
AUDUSD -- 0.6651
Below the 200 dma and 50 ema the short scenario is still active. Nevertheless, it makes sense to take profit in the direction of 0.6550 at the latest or already on current spot level. Since the high at 0.7158 on 1 February, the Aussie has shown a nice downward sequence, which could be over for the time being in the short term.
Good luck,
Sebbo