US Dollar Draws Near Key Support; EUR/USD To Two-Month Highs

It was a big week for US Dollar bears as the currency pushed down to a fresh low on the heels of a really disappointing NFP report. Stocks rallied to go along with that move of USD-weakness, leading many to point to the ‘good is bad’ theme that appears to have re-emerged in markets. But, this fails to recognize the lagging performance in tech stocks, which continue to trade on their back foot despite the S&P 500 pushing up to another fresh all-time-high.

In FX-land, trends appear to be a little more clear. The US Dollar has continued to sell-off, furthering the Q2 theme of weakness that re-emerged on the first trading day of the new quarter. The currency is fast approaching a big spot on the chart, taken from around the 90.00 psychological level, which is confluent with the 38.2% Fibonacci retracement of the 2001-2008 major move.

This same zone helped to arrest the nine-month sell-off around the New Year open, which led to that Q1 bounce. But, as looked at in the Q2 Technical Forecast for the US Dollar, that bounce appeared corrective in nature with the bigger picture trend still carrying a bearish tonality, which has played out so far in the first half of Q2.

US DOLLAR WEEKLY PRICE CHART

US Dollar Weekly Price Chart

Chart prepared by James StanleyUSD, DXY on Tradingview

Taking a step back to look at the bigger picture, and the importance of this current support area becomes a little more clear.

That Q1 swing-high showed up right at the underside of a trend channel that’s been going for almost a full decade. The support side of that channel offered a bounce in the USD in August/September, but sellers were able to take it out on a recurrent attempt in November. Below this current zone of support – 89.20 is the 2021 low and the current six-year-low rests around 88.25, after which there’s no nearby or recent support to work with.

US DOLLAR MONTHLY PRICE CHART

US Dollar Monthly Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

1 2
View single page >> |

Disclaimer: DailyFX, the free news and research website from IG, is one of the world's leading sources for news and analysis on the ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.