Title: The US Dollar Gains Strength as Buyers Reclaim Technical Control
Original Author: Greg Michalowski
Source: InvestingLive.com
As we progress through the current trading landscape, the US Dollar (USD) is showcasing renewed vigor, a trend that suggests greenback buyers are regaining technical control across several key currency pairs. Driven by supportive market dynamics and technical setups, the dollar’s movement signals a potentially larger shift in forex sentiment — one where technical factors are aligning with broader macroeconomic themes.
This expanded analysis breaks down the recent price actions, key technical levels, and potential implications across major USD-based currency pairs, emphasizing how the greenback is reclaiming its strength.
Overview of the Dollar’s Strength
– The USD Index (DXY) — representing the dollar against a basket of six major currencies — has pushed higher recently, a clear indication that dollar bulls are not only back but are beginning to assert dominance.
– This directional move coincides with both a bounce off support levels and a break above technical ceilings, giving credence to a wider upward trend.
– Fundamentally, the dollar’s rise can be attributed to a robust US economic backdrop, relatively higher Treasury yields, and a market narrative that still factors in rate differentials favoring the USD.
Technical Analysis: Key Takeaways
Greg Michalowski, the original author of the analysis posted on InvestingLive.com, outlines several pivotal technical factors that reinforce the dollar’s bullish twist. We’ll walk through the essential price levels and dynamics for several major USD pairs, expanding on the implications for traders and investors.
EUR/USD: Dollar Reclaims Dominance
– The EUR/USD pair bounced off a low near the 1.0800 level before the greenback made its push higher.
– Resistance was seen near the 100-hour moving average at 1.0877, which capped upside attempts.
– From a technical standpoint, sellers took greater control once price dipped back below the 100-hour moving average and subsequent breaks below the 200-hour MA at 1.0850 provided further confirmation.
– Momentum favors dollar buyers as long as price remains below these moving averages, with the next downside targets near 1.0800 and then 1.0775.
– Upward retracements would now need to break above 1.0850 and notably 1.0877 to unwind dollar strength.
GBP/USD: Bearish Bias Resumes
– Cable also reflects a shift where dollar buyers are gaining ground.
– Attempts to breach resistance levels near 1.2650 failed, and price action has since trended downward.
– The 1.2600 level, previously a support zone, has turned into interim resistance following a break below it.
– The bias continues to favor the downside, with sellers now eyeing a move toward 1.2520 and the 1.2500 psychological level.
– Technical resistance is clearly defined by:
– The 100-hour moving average around 1.2632.
– The 200-hour moving average at 1.2658.
– Key Fibonacci retracement levels which cluster around those moving averages.
USD/JPY: New Highs and Buyer Enthusiasm
– The dollar has flourished against the yen, with the USD/JPY pair climbing to highs not seen for several months.
– A break above resistance at 145.00 reinvigorated buyers, followed by further upside momentum due to a lack of meaningful intervention by Japanese officials to halt yen depreciation.
– Technical upside targets are now extending toward the 146.50 and 147.00 levels.
– Supports have been reinforced at:
– 145.00, the previous resistance-turned-support.
– Short-term moving averages catching up to price action around the 144.70-144.80 zone.
– As long as these supports hold, the path of least resistance remains higher.
– Caution is advised should intervention threats intensify, which could quickly reverse gains.
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