With the attack by Hamas terrorists on Israel, we see mainly risk off movements this morning. Naturally, this also includes increased dollar demand, which has pushed the dollar index (DXY) well above the 106 level again. This means that the expansive budgetary policy of the Biden administration is once again moving somewhat into the background of attention, but in the medium term I see it as a major danger for the dollar.
(Source: x/zerohedge)
In addition to the risk off demand for dollars and the weak budgetary policy of the Americans, yields of course also play a major role. Should the risk off demand for US bonds significantly depress the level of yields, an important driver of the recent dollar rally would disappear. But can yields even fall that much in the face of money printing?
Last week Friday the Dollar Index actually ended the week with a red weekly candle. The upward trend has thus been interrupted for the time being. A trend reversal cannot yet be derived from this, but it is a first sign that the dollar strength could be over. From a technical perspective, however, there is still room up to the 108 point mark. Players with little conviction should therefore monitor their dollar shorts closely.
EURUSD -- 1.0537
The currency pair is still in a countermovement, which has stopped below the mid Bollinger Band (1.0602) for the time being. A clear daily close above the 1.0600/17 resistance zone could bring the 50 ema (1.0762) back within reach. Below the 1.0500/83 support zone, the bullish scenario is over again.
GBPUSD -- 1.2182
An almost identical pricing is shown in sterling against dollars. The countermovement stopped right below the mid Bollinger band (1.2261) for the time being. For further gains, support at 1.2108/06 (the past two daily lows) must hold. Below this level, the major 1.2000 treshold will come into focus again.
USDCHF -- 0.9105
The currency pair has been massively overbought. The correction of the last few days was therefore overdue and the 0.9148 level offered no support. From a technical perspective, the 200-day line and the 0.9000 level may be the next opportunity for a renewed entry into CHF shorts. However, for the reasons mentioned above (US budget policy), I am currently not convinced that the dollar still has much upside potential against the Swiss franc.
Good luck,
Sebbo