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

FOMC sends dollar lower, while AUD weakness drives AUD/NZD into a bearish double-top formation.

Pound and dollar
Source: Bloomberg

FOMC sends US dollar packing, yet a bounce could be in sight

Yesterday’s Federal Open Market Committee minutes had a profoundly negative effect upon the US dollar, with the dollar basket breaking below the $96.92 support to create a new low. However, there are signs that we could have a recovery of sorts today, with the creation of a new intraday high.

This short-term bullish sentiment holds unless we break below the 27 July low of $96.52. Ultimately the $96.92 level is going to be crucial, with a possible test as new resistance.

Should we see a break back above $96.92 and $97.32, then it would look bullish again for the medium-term, but for now I am just looking for a short-term bounce and then will see how it responds to key resistance.

USD/CAD creating bullish saucer formation

USD/CAD is moving in a much more bullish manner this week, with the pair creating new highs and higher lows. This continues on the bullish theme that dominated July. I remain bullish as long as price stays above C$1.286, which is some way off current prices.

There is a clear collection of resistance points just above the current price, with C$1.3182, C$1.3198 and ultimately C$1.3214. Therefore while I do expect further upside, I would also be on the lookout for a sell off back down to the lower end of this formation around those resistance levels, rather than a simple one-time break to a new high above C$1.3214.

GBP/AUD pushes towards multi-year high

GBP/AUD has continued to regain ground following the sell off earlier in the month. While I continue to be bullish, I would expect some sort of reaction at the $2.1528 resistance level given its importance.

Thus I am bullish up until $2.1528, at which point I would await a close above that level to guard against a short-term sell off.

AUD/NZD breaks below major support level

AUD/NZD has broken below the crucial $1.11 support level which is a great indicator that we are set to see another substantial move lower. The $1.11 level not only signifies a new low, but also a double top, which projects the $1.0885 downside target. I will remain bearish unless we move back above $1.115, which would mean a new high.

Any bounce back to $1.11 would provide a great area for a possible reversal lower. But for the time being, I see it as a case of any upside as a better price to a move lower.  

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