Intraday Market Analysis – USD Goes Sideways, Tuesday, Oct. 25


USDCHF in consolidation

The US dollar stays muted over lackluster manufacturing and services PMI. The bullish bias remains intact as the greenback consolidates its gains around parity. Buyers may see the sideways action as an opportunity to accumulate at a better price. 0.9930 at the base of the previous breakout coincides with the 20-day moving average, making it a congestion area. Further down, the daily support at 0.9790 would be the bulls’ second level of defense. A close above 1.0140 may attract momentum buying and send the pair towards 1.0300.

EURGBP heads lower

The pound weakens as traders stay wary of political and economic uncertainties in Britain. The rebound came under pressure at 0.8780 at the origin of a mid-August sell-off. A bearish MA cross on the daily chart suggests a shift in sentiment, and the euro could be vulnerable unless it clears the said resistance. A bullish breakout may trigger an extended rally above 0.8850. The demand zone between 0.8580 and 0.8650 is a major level to keep the single currency afloat, or a deeper correction might send it below 0.8450.

US 30 gains momentum

The Dow Jones 30 rallies as weaker US business activity in October rekindles hopes of a dovish Fed. From the daily chart’s perspective, a pop above the support-turned-resistance at 31000 is a sign of strong buying interest in the short-term. A series of higher lows may encourage the bulls to extend upwards, further squeezing the short side. After clearing 31300, the index is heading to September’s high at 32600. The RSI’s overbought condition may cause a limited retracement with 30900 as the first support.

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