In New York trading, the US dollar index fluctuated flat at 104.0907, down 0.01%. The following is a technical analysis of the three currency pairs of EUR/USD, GBP/USD, and AUD/USD.
EUR/USD rises as US CPI rises
With the end of the French parliamentary elections, the euro has regained its vitality - mainly due to the sharp decline in the US dollar as the market almost fully digests the expectation of the Federal Reserve's September rate cut.
EUR/USD has risen by about 250 points from the lows in late June, easily breaking through the 50-day and 200-day moving averages. The currency pair now has a major resistance area - 1.0942-1.0960. These two levels correspond to the 50% and 61.8% Fibonacci retracement levels of the 2021-2022 decline and the sharp decline in 2023. For most of this year, the resistance area contained bullish momentum, with only two brief breakthroughs - although only intraday breakthroughs.
After approaching the June swing high of 1.0916, the bullish momentum may meet resistance ahead of the major zone, with the RSI indicator moving dangerously close to overbought territory.
Jerome Powell’s speech later this afternoon (00:30 Tuesday Beijing time) may help EUR/USD if he maintains the dovish tone adopted in his two-day testimony last week. However, the possible weak ZEW economic sentiment tomorrow may put pressure on the currency pair, which may lead to a pullback.
There is a clear lack of bullish willingness in EUR/USD positioning, which is understandable given the lower interest rate expectations and uncertainty about the French election.
The situation may be different next week, as the current positioning data does not take into account any changes on either side of the US CPI data.
There is a risk of overheating in the British pound after the UK election, which is a catalyst for the US CPI
GBP/USD has surged more than 350 points since the swing low in late June. The UK election result was largely a foregone conclusion, as polls before the result showed a landslide victory for the Labour Party. The market hates uncertainty, which is why British assets reacted well after the referendum result was announced.
The sharp sell-off in the US dollar has only strengthened the bullish trend for the British pound, pushing the currency pair to a new yearly high. The next important resistance level is seen at the July 2023 swing high of 1.3142, but the risk of overheating has become more apparent as the relative strength index appears to be recovering from overbought territory. It is not uncommon for the market to take a breather after such a rapid rise, which means that the possibility of a short-term correction cannot be ruled out at this stage.
CFTC, CoT report data show that speculative long positions of large speculators and hedge funds have surged, widening the gap between longs and shorts. The British pound is clearly favored, with long positions increasing significantly, while short positions remain depressed. The recent decline in the US dollar has helped the British pound become one of the main winners in the foreign exchange market.
Australian dollar momentum slows down
The Eastern giant's second quarter GDP growth was lower than expected compared to the second quarter of last year, which may affect the bullish momentum of the Australian dollar/US dollar. The Australian dollar usually follows the trend of the S&P 500 index. The S&P 500 index has performed well in 2024, mainly due to the performance of several key stocks. The Fed is expected to cut interest rates for the first time in September, which contrasts with the Reserve Bank of Australia's (RBA) attitude in the face of stubborn inflation.
The widening interest rate differential between Australia and the United States is helping the Australian dollar to remain high, but the pair has recently entered overbought territory, suggesting a possible correction in the short term. Potential support is seen at 0.6730, and if bullish momentum continues higher, the upside extension target is seen at the late December high of 0.6870.
According to the Commodity Futures Trading Commission (CFTC) and the Commitment of Traders (CoT) report, market sentiment is shifting as net short positions are reduced and net long positions are increased. This change is influenced by the interest rate differential between Australia and the United States.
Overall, the interaction of interest rates, economic data and market sentiment will be the key factor in determining the future direction of the AUD/USD currency pair.
简体中文
ภาษาไทย
繁體中文
Indonesia
2024-07-16
433
