Once again, dollar bears have to deal with the 104.70 level (dollar index = DXY). This time, however, the resistance could be in serious danger after yesterday's daily close was already above it. As usual, it depends on the individual currency pairs whether a sustainable breakout to the upside succeeds. The next target would then be a little more than 1 percent higher at 105.89 (annual high of 8 March).
EURUSD -- 1.0726
“For me, the 50 ema (1.0929) remains the short term resistance level” (MC #160). The daily close of 30 August was exactly that level. But in the end, the resistance held and that is all that matters. The final break of the 200 dma to the downside on Friday was followed by a red candle yesterday. In this respect, I expect further pressure on the euro although the lower line of the trend channel could support the currency pair here for the time being. If not, the downward movement could stop at the 1.0635 mark in the short term. The more interesting targets, however, are another figure lower at the annual lows of 1.0516/1.0483.
GBPUSD -- 1.2552
The currency pair is trading below the 1.2591 support again and it would be a surprise if this becomes a second false break. At least we could rely on the resistances we defined with the 50 ema in the last sterling update. The target for shorts therefore remains the same as last time, the 200-day line (1.2425).
USDJPY -- 147.58
I had written several times that the short scenario above the 145 mark was over. In the meantime, however, the currency pair is trading two and a half figures higher and courageous players could consider buying yen towards the 148 level. In the medium to long term, I maintain my view that the Bank of Japan will not be able to keep interest rates low due to rising price pressures. I don't want to be long the dollar if the BoJ reacts, either with a rate hike or with a further adjustment of its yield curve control. Nevertheless, a test of the 2022 highs cannot be completely ruled out. Tight stops or deeper pockets will help.*
AUDUSD -- 0.6383
“Ideally, a clear daily close above the 0.6484/88 resistance zone would now follow” (MC #160). You can guess what happened that session and the next day: 30aug 0.6479, 31aug 0.6486 finally followed by a big red candle yesterday. Month-end flows were spooking the market but at the end of the day, the defined resistance also held in this pair. However, this could mean that the bottom formation suspected in the last update is over. In this respect, I would not look for longs here. But what do I know? The small support at 0.6365 has obviously held for now.
Good luck,
Sebbo
(*reminder: my content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances.)