US Dollar Recovery Could Undermine Gains in AUD/USD & EUR/USD
US DOLLAR TECHNICAL OUTLOOK:BULLISH
- AUD/USD is at a critical turning point – will capitulation catalyze a sharp decline?
- EUR/USD has surged for eight days straight but could decline ahead of resistance
- DXY index has fallen to an 11-week low, though selling pressure may start abating
AUD/USD has just punctured the lower lip of the 0.7032-0.6911 inflection range (purple-dotted lines), though doubt about lasting follow-through could catalyze a pullback. Capitulation at this key technical zone could also inspire sellers to enter the market and pressure AUD/USD into retesting former resistance-turned-support at 0.6642 (gold-dotted line).
AUD/USD – Daily Chart
AUD/USD chart created using TradingView
Since May 26, EUR/USD has risen over four percent, and has closed higher for eight consecutive days as it hovers at multi-week highs. The next obstacle the pair will have to confront may be the early-March swing-high at 1.1447 (upper gold-dotted line) where the pair had previously stalled before plunging almost seven percent. If EUR/USD capitulates before the feet of resistance, it could catalyze a broader pullback.
EUR/USD – Daily Chart
EUR/USD chart created using TradingView
The US Dollar index (DXY) has closed lower for eight consecutive days after trading sideways throughout April. The Greenback is now hovering just above a narrow but critical support range between 96.60 and 96.52. Cracking that floor opens the door to retesting the mid-March swing-low at 95.04. However, if selling pressure abates, DXY may seek to retest former support-turned-resistance at 98.27.
DXY – Daily Chart
DXY chart created using TradingView
--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.