The US Dollar extended the optimism in the first half of the week and edged higher against its main rivals. The EUR/USD pair is pressured around 1.1200 on disappointing German data, while the USD/JPY pair is traded sideways around the psychological level at 105.40.
Geopolitical concerns (China-Hong Kong) plus usual jitters on the US-China trade war and the impact on the global growth keep the preference for safer assets well and sound for the time being.
The pair is gaining 0.20% at 97.58 and faces the next barrier at 97.85 (high Aug.7) seconded by 98.37 (monthly high May 23) and then 98.93 (2019 high Aug.1). On the downside, a break below 97.21 (low Aug.6) would open the door to 96.94 (200-day SMA) and then 96.67 (low Jul.18).
The US Dollar Index is up for the second session in a row today, looking to regain the area of last week’s tops around 97.80-97.90 points. The index is gaining 0.20% at 97.58 points and faces the next barrier at 97.85 points (high August 7). This area of initial resistance is reinforced by a Fibo retracement of the 2017-2018 drop at 97.87 points ahead of 2019 high at 98.93 (August 1).
The US Dollar Index is up for the second session in a row so far on Tuesday, although it remains within the broader sideline theme following the rejection from new YTD peaks near 99.00 points. The recovery in the buck to the 97.60 points region was in tandem with another downtick in US bond yields, where the 10-year benchmark dropped to the area of multi-year lows around 1.64%. As usual, trade concerns and the unabated “flight-to-safety” continue to sustain the move lower in yields.
In the meantime, the critical 200-day SMA of the US Dollar Index at 96.94 points continues to hold the downside and sustains the constructive outlook while above it.
The EUR/USD pair is trading around 1.1200 after the German ZEW Economic Sentiment survey plunged to -44.1 points, below expectations. The US dollar is gaining ground on a risk-averse mood.
Germany is considered the engine of the Eurozone – and it is derailing and depressing the common currency. ZEW has pointed out several issues with the recent US-Sino trade escalation topping the list. The People’s Bank of China fixed the yuan above market expectations – but lower once again. The gradual decline has been angering the US which sees it as a competitive devaluation.
The EUR/USD pair is setting lower highs and lower lows – a bearish sign. While downtrend resistance and downtrend support are not parallel, they are both pointing down. Other indicators are mixed – momentum and the Relative Strength Index (RSI) remain stable while the pair is trading close to the 50, 100, and 200 Simple Moving Averages.
Support awaits at 1.1170 which was a swing low last week. It is followed by 1.1135 that has provided support in late July and then by 1.1110 and 1.1101 – both strong lines from last month.
Resistance awaits at 1.1225 which held it down earlier this week, and then by 1.1250 which is the highest level in August. The triple-top of 1.1285 is next.
The USD/JPY pair has reached a daily high of 105.58, resuming its decline as Europe came in, on the back of risk aversion. Bond yields continue to fall, with negative yields spreading throughout the Union, and that of the US 10-year Treasury note down to 1.62%.
The USD/JPY pair held so far above Monday’s multi-month low of 105.04, but trades a few pips above it, maintaining the negative bias according to intraday readings. As said in previous updates, the pair has long-term support in the 104.20-104.30 region, and a possible bearish target should the decline extend below the 105.00 figure. The 20 SMA keeps limiting the upside by heading lower above the current level, and far below the larger ones. Technical indicators in the mentioned chart have resumed their declines within negative levels, although their bearish momentum is limited at the time being. The pair could correct higher if it manages to recover above 105.60, the immediate resistance.
The support levels stand at 105.00, 104.75, 104.30, while the resistance stands at 105.60, 106.00, 106.40.