The US Dollar Index (DXY) has traded off a bit the last few sessions, but is coming down on support that might put a floor in here soon. On that, the Euro will be set up to roll over and trade lower again as trend and resistance keep the current bounce in as only a corrective move. USDJPY has taken a hit on haven flows as stocks get hit, this is seen as likely to continue…
Technical Highlights:
- US Dollar Index (DXY) falling into support area
- EURUSD could soon decline again to a new low
- USDJPY to see more selling with stocks
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US Dollar Index (DXY) falling into support area
The US Dollar Index (DXY) is backing off a bit after hitting a new cycle high, but the down-move may prove short-lived if rising trend support has anything to say about it. The trend-line in question is coming up from June. Should that break then a larger down-move will be the risk, but let’s first focus on the nearest support and the fact that the trend is still pointed higher overall.
With that said, though, there continues to be resistance in getting momentum running higher, eventually it appears as though USD will get into gear but that is hard yet to say when it will commence. Markets overall appear to be in for some volatility this quarter so that may come sooner rather than later.
US Dollar Index (DXY) Daily Chart (backing down towards support)
U.S. Dollar Currency Index (DXY) Chart by TradingView
EURUSD could soon decline again to a new low
The Euro is naturally opposite the DXY as is the anti-Dollar and the largest constituent in the index. The June trend-line is coming up, and with the trend structure negative EURUSD should find difficulty to sustain strength. Look for it to stall, possibly today or early next week, and continue lower to a new low beneath 10879. Inching towards the April 2017 French election gap-fill.
EURUSD Daily Chart (trend, resistance working against)
USDJPY to see more selling with stocks
USDJPY is taking some heat this week with pressure coming on global equity markets. Haven flows into the Japanese Yen could continue as stocks are set up to continue selling off. For more on this view, check this piece from this morning – Dow Jones, Nasdaq 100 Technical Forecast Darkens on Breakdown.
There is support in the current vicinity, but not expected to last. Stay below the trend-line up above and 10847 and USDJPY looks poised to trade neutral to negative. The lows under 10500 look at risk in the not-too-distant future if stocks continue to come off.
USDJPY Daily Chart (turn down at of picking up momentum)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
