Commentary
Yesterday was a bad day for risk and a good day for the Dollar. The Dollar-Index (DXY) printed a new multi-year high of 104.929. Nevertheless, I will keep my bearish Dollar bias and look carefully for signs of weakness.
Inline with DXY the currency pair EURUSD printed a new low of 1.0354 just 14 pips above the 1.0340 treshold. What happened was what I feared: “In this respect, I do not know whether the Euro can start a recovery rally without dipping even more” (#76). Seen from here, the trading plan is clear. Try tactical longs as long as the pair trades above the 1.0340 support. Prices below could lead more or less directly to parity.
The USDCHF currency pair did not want to miss parity during DXY’s rise, of course. The high of yesterday was 1.0050 and of today 1.0042. Above parity it is dangerous to short the Dollar but, of course, you can give it a try with tight stops. I will keep an eye at the wednesday's spike low (0.9872) which marks the crucial support zone.
How low can GBPUSD go? Of course I don't know either, but slowly the bottom could be reached. Around 1.2070 / 1.2000 the currency pair should be very well supported. With respect to the nearly one year lasting 15% sell off from 1.4249 hod (01jun21) to 1.2166 lod (12may22) and the oversold condition, you can assess the risk well.
A quite convincing Dollar short delivers USDJPY for now. After failing to hold 1.3000, the currency pair quickly dipped below the mid Bollinger band (129.19) which is my decisive pivot point (#76). As long as the pair is not going to reclaim that level again you can look for short opportunities. A deeper correction to around 125 (50 ema) could be on the table.
The 0.7000 level is currently a wall and as long as the AUDUSD currency pair trades below that mark the risk is high that we have not seen the bottom yet. Nevertheless, the Aussie is oversold and as with other Dollar crosses, a major reversal is always possible.
Charts
(EURUSD, daily)
(USDCHF, daily)
(GBPUSD, weekly)
(USDJPY, daily)
(AUDUSD, daily)
Have a nice weekend!
Sebbo