We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Wall Street
Bullish
Gold
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
More View more
Breaking news

Chinese PMI Data Beats Estimates. Manufacturing 52.0, Est 44.8, Non-Manufacturing: 52.3, Est 42.0

Real Time News
  • LIVE NOW! APAC Head Strategist @IlyaSpivak discusses the technical and fundamental $AUDUSD outlook for the week ahead here - https://www.dailyfx.com/webinars/378612179?CHID=9&QPID=917720&utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.82%, while traders in US 500 are at opposite extremes with 72.90%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/el9cpkaZNX
  • The $USD may rise versus the Singapore Dollar, Indonesian Rupiah and Malaysian Ringgit if capital flows out of #ASEAN countries as key U.S. data risks a selloff in equities. Get your market update from @ddubrovskyFX here: https://t.co/JWIRn6MLrK https://t.co/W3zdKcvSCJ
  • LIVE IN 30 MIN: APAC Head Strategist @IlyaSpivak discusses the technical and fundamental $AUDUSD outlook for the week ahead here - https://www.dailyfx.com/webinars/378612179?CHID=9&QPID=917720&utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • RT @DanielGMoss: Spontaneous spike prior to Chinese #PMI releases Strong results compared to previous record lows Non-manufacturing: 52.…
  • China's NBS: Production hasn't recovered to normal level before outbreak -BBG
  • NBS: Rebound in China PMI doesn't mean economy is back to normal. March PMI alone can't tell improving trend -BBG
  • #AUDUSD trading slightly higher after Chinese PMI was released, though prior to the publication the pair briefly plummeted 1.5% before recovering https://t.co/n6bS5DtEpT
  • 🇨🇳 CNY Composite PMI (MAR), Actual: 53.0 Expected: N/A Previous: 28.9 https://www.dailyfx.com/economic-calendar#2020-03-31
  • China Manufacturing PMI: Actual: 52.0 Est: 44.8 Prior: 35.7
Surging US Dollar Hits a Wall; is a USD Unwind Underway?

Surging US Dollar Hits a Wall; is a USD Unwind Underway?

2020-03-20 16:00:00
Rich Dvorak, Analyst
Share:

US DOLLAR RALLY PAUSES AS AUD/USD & GBP/USD PRICE GAIN GROUND, USD/CAD DROPS

  • USD price action set to peel back 0.8% as US markets come online for Friday’s trading session
  • A surging US Dollar has launched the DXY Index nearly 8% higher off its month-to-date low
  • GBP/USD spikes higher as AUD/USD finds relief from recent selling pressure while USD/CAD reverses

An incredible rally in the US Dollar over the past two weeks is on pace to finish today’s trading session on its back foot. The broader DXY Index has climbed more than 7% since the March 09 intraday low due to a surging US Dollar against major peers.

Forex for Beginners
Forex for Beginners
Recommended by Rich Dvorak
Learn the FX market basics and all about forex trading
Get My Guide

Amid the coronavirus pandemic and pessimistic market sentiment, the US Dollar has gained ground largely on the back of its premier status as a safe-haven currency.

DXY – US DOLLAR INDEX PRICE CHART: WEEKLY TIME FRAME (OCT 2016 TO MAR 2020)

US Dollar DXY Index Price Chart

The jump in the US Dollar over the last two weeks has pushed the DXY above 100 and to a three-year high. Although, the staggering spike in USD price action has pushed the US Dollar Index above its 2-standard deviation and 3-standard deviation Bollinger Bands.

Top Trading Opportunities in 2020
Top Trading Opportunities in 2020
Recommended by Rich Dvorak
Find out our latest Top Trading Opportunities
Get My Guide

That said, a consolidation and mean-reversion lower in the US Dollar Index could be in the cards. This is considering the 95% and 99.7% statistical probabilities that price action will be contained within its 2-standard deviation and 3-standard deviation Bollinger Bands, respectively. Although, as FX volatility climbs, which is also indicated by the expanding weekly average-true-range, there is potential that the US Dollar surge will resume.

GBP/USD PRICE CHART: 2-HOUR TIME FRAME (MARCH 08 TO MARCH 20, 2020)

GBPUSD Price Chart Pound Sterling to US Dollar

With the Pound Sterling comprising 11.9% of the US Dollar Index, it comes as little surprise that the US Dollar benchmark is up nearly 8% off its month-to-date lows after GBP/USD price action sank almost 1,800 pips in just 10 trading days.

GBP/USD BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 3% 3% 3%
Weekly -33% 115% 0%
Learn how to use sentiment in your trading strategy
Get My Guide

GBP/USD looks like it is beginning to rebound, however, with the Pound Sterling turning against the US Dollar. Gains in GBP/USD follow an emergency interest rate cut and liquidity injection by the BoE. Spot GBP/USD prices now trade above its 9-period and 34-period exponential moving averages.

AUD/USD PRICE CHART: 4-HOUR TIME FRAME (MARCH 06 TO MARCH 20, 2020)

AUDUSD Price Chart Australian Dollar to US Dollar

Recent downside in the Australian Dollar, which pushed AUD/USD to fresh lows and its weakest reading since September 2002, has slowed after a short-term relief bounce off the 0.5600 price level. Although AUD/USD selling pressure started to abate yesterday after the RBA announced a comprehensive support package, spot prices seem to have found resistance around the 0.6000 handle – a major zone of technical confluence underpinned by the 38.2% Fibonacci retracement of the Aussie-Dollar’s latest bearish leg.

Traits of Successful Traders
Traits of Successful Traders
Recommended by Rich Dvorak
Traits of Successful Traders
Get My Guide

The Australian Dollar might remain under pressure, however, if markets remain risk-averse as the coronavirus outbreak, its economic toll worsens, and currency volatility continues to run rampant. On the other hand, bullish divergence on the MACD indicator is positive technical development as spot AUD/USD price action reclaims its 9-period exponential moving average.

USD/CAD PRICE CHART: WEEKLY TIME FRAME (OCTOBER 2015 TO MARCH 2020)

USDCAD Price Chart US Dollar to Canadian Dollar

USD/CAD price action has snapped back lower after the US Dollar exploded 10% against its Canadian Dollar counterpart this month alongside the crash in crude oil. After surging to its highest reading since January 2016, spot USD/CAD seems to have run into a major level of technical resistance underpinned by this four-year high slightly above the 1.4500 handle.

USD/CAD BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 70% 18% 35%
Weekly 106% -1% 25%
Learn how to use sentiment in your trading strategy
Get My Guide

Nevertheless, the US Dollar could continue surging versus the Loonie and other currencies tied to economies heavily dependent on oil exports if the Saudi Arabia oil price war is sustained for much longer.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.