FX snapshot – Dollar Index, USD/CAD, GBP/AUD, AUD/NZD

First FOMC, now Greece; the US dollar is getting battered by fundamentals. Meanwhile AUD/NZD continues fall, with further downside expected.

Joshua Mahony
Market Analyst, London

2015-08-21T09:37:46+0100

Source: Bloomberg

Greek fears send dollar lower, yet key support provides bounce

The US dollar has been hit badly by fundamental news this week. However, the selloff seen overnight has been eased momentarily by a bounce from the 10 July low of $95.66. This looks like it could bring a bullish engulfing pattern, and while the overall picture now looks significantly more bearish for the medium term, the short term could provide a bounce back towards $96.15 resistance. Ultimately I am bullish over the short term unless price falls below the $95.66 level. Watch the short term intraday charts to see the creation of a new higher high and higher low for greater confidence.

Dollar Index chart

USD/JPY breaks below crucial support level

USD/JPY has broken below a crucial level of support, at ¥123.01. This is a major swing low from late July which, given the break lower, is expected to provide new resistance for another move lower. Of course, we could see a bounce higher given the size of the recent selloff. However, with the price now stuck between the 50% Fibonacci retracement at ¥122.85 and the resistance level at ¥123.01, I will take my lead from an intraday close out of this current zone.

USD/JPY chart

EUR/GBP breaks higher, but evening star points to weakness

EUR/GBP has broken to a new high following the bullish wedge breakout last week. We have a clear evening star reversal formation being created, which would point towards further downside today, and while I do expect to find some sort of support around the £0.71-£0.7071 region, I am looking for a short-term move lower for this pair as long as the current candle closes below the key £0.716 level.

EUR/GBP chart

Panel Title

AUD/NZD continues to move lower

AUD/NZD continues to trend lower, following the close below NZ$1.11. We have now moved into a position where the pair is likely to selloff into a next leg lower from the previous support level. Thus given that price is currently around the NZ$1.105-NZ$1.1053 region, which provided the base for the previous move lower, I expect to see this pair selloff yet again. I remain bearish unless price moves above NZ$1.11 and still see NZ$1.0885 as a realistic downside target for the medium term. ff.