US DOLLAR OUTLOOK: USD PRICE ACTION ATTEMPTS REVERSAL AGAINST EURO & AUSSIEThe US Greenback is coming off its worst month of
US DOLLAR OUTLOOK: USD PRICE ACTION ATTEMPTS REVERSAL AGAINST EURO & AUSSIE
The US Greenback is coming off its worst month of efficiency since April 2011 after a steep 4% slide decrease within the DXY Index. USD value motion stumbled throughout a number of main and rising market foreign money pairs all through July, however US Greenback weak spot was noteworthy towards its Euro and Australian Greenback friends particularly.
Really helpful by Wealthy Dvorak
Foreign exchange for Rookies
This has threatened the Buck’s King Greenback title as a bearish pattern begins to emerge with the broader DXY Index perched about 10% under March’s swing excessive. That stated, with EUR/USD and AUD/USD edging decrease over the past two buying and selling classes, the US Greenback is beginning to present indicators of life and brings potential for a bigger reversal into focus.
DXY INDEX – US DOLLAR PRICE CHART: MONTHLY TIME FRAME (OCT 2010 TO AUG 2020)
Chart created by @RichDvorakFX with TradingView
Taking a look at a month-to-month US Greenback Index chart reveals a long-standing bullish channel of help prolonged by means of a collection of upper lows since 2011. Together with the prospect for a potential mean-reversion increased, this zone of technical help could present some buoyancy to the broader US Greenback and alleviate current promoting stress regardless of prolonged USD swap traces.
Really helpful by Wealthy Dvorak
Traits of Profitable Merchants
To not point out, a main driver facilitating current US Greenback weak spot has possible included the prospect of diverging financial progress trajectories between america and different developed economies, such because the Eurozone or Australia. Shifting winds might trigger this elementary narrative to vary in consideration of rising coronavirus second wave danger outdoors of the US, which can supply a catalyst sparking a bullish US Greenback reversal if this theme can garner extra credence.
EUR/USD PRICE CHART: DAILY TIME FRAME (23 APR TO 03 AUG 2020)
EUR/USD value motion has already began to indicate indicators that Euro bulls have grown exhausted. That is steered by the noteworthy 200-pip tumble recorded by EUR/USD since Friday’s swing excessive and follows a potential double-top sample on the 1.1900-handle.
| Change in | Longs | Shorts | OI |
| Each day | -2% | 13% | 8% |
| Weekly | 0% | -1% | -1% |
Additional, spot EUR/USD now trades under its 8-day transferring common because the relative energy index drifts decrease out of ‘overbought’ territory. Sustaining the short-term transferring common might point out that EUR/USD bulls stay within the driver seat, however sliding under this technical barrier may sign a bigger pullback could possibly be in play.
AUD/USD PRICE CHART: DAILY TIME FRAME (29 FEB TO 03 AUG 2020)
AUD/USD value motion equally reveals current US Greenback weak spot abating. The professional-risk Aussie has slid over 100-pips towards its US Greenback peer after breaching the 0.7200-price stage late final week.
| Change in | Longs | Shorts | OI |
| Each day | -4% | 7% | 2% |
| Weekly | -7% | -8% | -8% |
This reiterates a potential bearish rising wedge sample seemingly fashioned by AUD/USD all year long. Likewise, unfavourable divergence proven on the MACD hints at waning upward momentum and potential for a reversal. A break beneath the decrease help line might point out the US Greenback could proceed clawing again current draw back.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception