The US Dollar has managed to regain, generating upside traction amidst increasing concerns among investors on the likelihood that a recession could hit the US economy in the medium term, all after the 2-year and 10-year bonds yield curve inverted yesterday for the first time since 2007. The sharp fall in US yields saw the 10-year reference trading in sub-1.55% levels, area last visited more than three years ago.
The EUR/USD struggles to extend the bounce above the 1.1150 levels, despite a recovery in the German 10-year bund yields. Meanwhile, the recovery in the GBP/USD pair gained traction following an unexpected rise in the UK July Retail Sales, now pushing the rates back above the 1.21 handle. Markets ignore the latest Brexit and trade worries.
The US Dollar Index has managed to regain and briefly surpass the critical barrier at 98.00 points earlier today. A convincing breakout of this key resistance should lift the Greenback further and allow for a test of 98.37 points (May top) ahead of 2019 highs just below the 99.00 points mark.
While above the short-term support line off June’s low (95.84 points), the upside momentum in the buck looks well sustained.
The EUR/USD pair downtrend may be expected to continue, while pair is trading below resistance level 1.1160, which will be followed by reaching support level 1.1106.
An uptrend will start as soon, as the pair rises above resistance level 1.1160, which will be followed by moving up to resistance level 1.1180 and 1.1222.
On a weekly basis, an uptrend will start as soon, as the pair rises above resistance level 1.1210, which will be followed by moving up to resistance level 1.1270 and if it keeps on moving up above that level, we may expect the pair to reach resistance level 1.1370.
The downtrend will start as soon, as the pair drops below support level 1.1160, which will be followed by moving down to support level 1.1106 and if it keeps on moving down below that level, we may expect the pair to reach support level 1.1027.
The USD/JPY pair rose to a daily high of 106.78 supported by improving market mood but failed to stay in the positive territory as the latest headlines surrounding the US-China trade dispute triggered a fresh risk-off wave, revealing how fragile the risk perception is. As of writing, the pair was down 0.08% on the day at 105.80.
Responding to the United States’ decision to impose 10% additional tariffs on some Chinese imports next month, China today said that it will have to take retaliatory measures and noted that the US action was violating the consensus reached at the G20 meeting in Osaka.
The USD/JPY pair is gaining short-term bearish traction at the time being, trading near its daily low. In the 4 hours chart, the pair is breaking below its 20 SMA, while technical indicators turned sharply lower, the Momentum still holding above its mid-line, but the RSI already at 45, indicating that further declines are likely. Intraday highs and lows in the 105.50 regions, providing immediate support, with a break below the level opening doors for a steeper decline toward fresh lows below the 105.00 figure.