The US Dollar keeps the rally against its major competitors. The relatively expensive dollar makes the investment in commodities less attractive, which reduces the currencies of countries relying on such exports.
The US dollar index, measuring its value against the six major currencies, was stable at 96.35 points, moving close to its two-week high. The dollar index rises for a third consecutive session, mainly due to the weaker euro, which has the highest weight in the index, about 58%.
A breakout of 96.68 (high January 24) would target 96.79 (23.6% Fibo of the September-December up move) en route to 96.96 (2019 high January 2). On the downside, immediate contention emerges at 96.22 (100-day SMA) followed by 95.96 (21-day SMA) and finally 95.30 (200-day SMA).
The Euro was at 1.1364 USD, losing 0.45% of its value on Wednesday. The euro lost about 1.3% over the past week as investors speculate that the European Central Bank will maintain its monetary policy because of low inflation in the Eurozone.
The currency pair EUR/USD navigates near 2-week lows. There seems to be no respite for the shared currency this week, now forcing spot to drop further and test fresh mutli-day lows in the 1.1330 USD area.
A break below 1.1331 USD (low February 7) would aim for 1.1329 USD (200-week SMA) en route to 1.1289 USD (2019 low January 24).
On the other hand, the next hurdle emerges at 1.1390 USD (55-day SMA) seconded by 1.1433 USD (100-day SMA) and finally 1.1442 USD (38.2% Fibo of the September-November drop).
The Australian dollar collapsed close to a two-week low on Thursday after market participants raised bets that most likely the Reserve Bank of Australia would cut interest rates this year amid rising risks to economic growth in the country and around the world. On Wednesday, RBA opened the door for a possible cut in interest rates as it recognized the growing economic risks to the country that pushed the Australian dollar.
The Australian dollar moved close to its lowest weekly level of 0.7103 USD, after losing 1.8% in the previous session, the biggest drop for more than a year.
The British pound also fell to 1.2927 USD, accounting for a loss of 1.3% since early February due to problems with Brexit.
The UK is about to leave the European Union on March 29 without a deal unless British Prime Minister Theresa May fails to persuade the Union to resume negotiations on the divorce deal it reached in November and then to make skeptical British MPs vote on the new agreement.
The Bank of England (BoE) will meet later on Thursday and is expected to keep interest rates unchanged. The BoE possibly will refrain from changing interest rates until the deadlines for leaving the EU are clear. The BoE governor Mark Carney will repeat his warning of the risks of chaos with Brexit and assure investors that the bank is ready to increase incentives if serious disturbances in the markets occur.
The GBP/USD pair is facing the next down barrier at 1.2894 USD (low February 7) seconded by 1.2805 USD (55-day SMA) and finally 1.2668 USD (low January 15). On the upside, a break above 1.2978 USD (21-day SMA) will open the door to 1.3000 USD (high January 17) and then 1.3032 USD (200-day SMA).