FX snapshot – US Dollar Index, GBP/USD, EUR/GBP, USD/JPY

US dollar resurgence comes into question at key moving average, while EUR/GBP breaks out of range in a bearish manner.

A man looking at data
Source: Bloomberg

Dollar Index reaches key resistance which will be decisive

The US dollar has been on the rise over the past two trading days, bringing the price back to the 200-period (four hour) SMA which has provided key resistance one two occasions in the past month. The consolidation we have seen overnight looks a lot like a flag, which is a continuation pattern and points to another move higher. However, the existence of that SMA means I am awaiting a break higher to gain confidence that the next move is to the upside.

An intraday close above $96.15 would point towards a move to $97.0, whereas a reversal pattern could point to yet another selloff, initially back towards $95.0. The stochastic and MACD indicators both show a market which could possibly turn lower and thus awaiting the initial move is going to be key here.

GBP/USD continues to trend lower following resistance rejection

GBP/USD is continuing a gradual stepped move lower following the rejection of our resistance zone ($1.5690-$1.5652). There is a distinct possibility that we will likely see some form of further downside to come, yet the first major challenge to this move lower is at the $1.1.5477-$1.5467 area of support alongside the descending trendline. Considering the upward trend seen since 4 September, this would look a lot like another retracement in an uptrend.

I would only expect further downside should the price close below this area of support (also including the descending trendline). A close below $1.545 would look towards $1.54 and $1.535. However, Look out for possible intraday bullish reversal signals as long as the price consolidates at this area of support. A break higher could quite easily happen here, bringing us back to the resistance zone ($1.5690-$1.5652).

EUR/GBP breaks below key support level

EUR/GBP has managed to break out of its range yesterday, with the price currently testing £0.7223 as new resistance. This brings a bearish look to proceedings, especially if the price remains below £0.7223. Given this breakout, I am now looking for further downside, with any move higher into the £0.724-£0.7223 resistance zone as a likely precursor to another move lower. The next major level of support to watch out for comes in at £0.716.

USD/JPY reversing lower with further downside likely

The USD/JPY pair has seemingly turned lower for what looks like another downward move in a symmetrical triangle formation. Previous selloffs have been very consistent and thus I believe we will see a fairly swift selloff back towards the Y119.6 area in the short term. How we resolve this current period of consolidation is less known, but over today’s trading I am confident we will see further downside to come. 

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