Dollar Index recovers amidst US Treasury Yield surge

Note: Charts provided by Trading View

 

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

February, as you can see, remains considerably off worst levels and recently entered positive territory, trading 0.4 percent higher. Closing the month out at current prices, in the form of a hammer candle (bullish signal at troughs), is likely to excite candlestick enthusiasts.

Downstream, 1.1857/1.1352 represents demand; northbound, however, shines light on ascending resistance (prior support – 1.1641).

In terms of trend, the primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.

Daily timeframe:

EUR/USD stabbed to peaks at 1.2243 on Thursday, yet on the back of the DXY finishing off worst levels as US Treasury yields spiked, the currency pair wrapped up in the shape of a shooting star pattern off highs.

Upstream, we see Quasimodo resistance at 1.2278; to the downside, we’ll likely zero in on demand from 1.1923/1.2001—houses support at 1.1965—a previous Quasimodo resistance.

RSI action remains north of the 50.00 centreline, on the doorstep of resistance at 60.30.

H4 timeframe:

Shaped by way of a shooting star and a gravestone doji, candle action peaked just south of supply priced in at 1.2282/1.2245 on Thursday and retreated back to support at 1.2179. Having seen this level serve well as resistance since mid-January, the odds of buyers attempting to make an entrance here is high.

Though should 1.2179 fail to offer a floor, Quasimodo support at 1.2135 is likely to call for attention.

H1 timeframe:

The one-sided decline amid US hours on Thursday delivered a forceful 1.22 breach to the downside and subsequent test of support at 1.2166 (a previous Quasimodo resistance level).

In the event 1.2166 fails to rejuvenate buying, the 100-period simple moving average at 1.2156 could make a show, closely shadowed by trendline support, taken from the low 1.2023.

Interestingly, the RSI turned from resistance at 78.97, a base capping upside since the middle of January. Note also that the value dropped through the 50.00 centreline.

Observed levels:

The area formed between H1 trendline support (1.2023), the 100-period simple moving average and H1 support at 1.2166 (green zone) is an area buyers possibly have on the watchlist today. Not only is the zone bolstered by a nearby H4 support at 1.2179, monthly price suggests scope to approach higher levels. A H1 close above 1.22 is likely to add bullish conviction.

Consequently, the above analysis implies the daily timeframe’s shooting star pattern is perhaps brittle.

 

 

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

AUD/USD, up by 2.9 percent in February, recently came within touching distance of trendline resistance (prior support - 0.4776), sheltered under supply from 0.8303/0.8082.

Also technically notable is February’s bullish engulfing pattern (although this formation is generally best noted at troughs).

In the context of trend (despite the trendline resistance [1.0582] breach in July 2020), the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Thursday, as you can see, carved out a bearish outside reversal pattern from supply at 0.8045/0.7985 (located south of monthly supply at 0.8303/0.8082), movement nearly engulfing three previous candles.

Lower on the curve, demand is next in line at 0.7726/0.7806, intersecting with trendline support, etched from the low 0.5506.

RSI bearish divergence also greeted the charts yesterday, with the value subsequently exiting overbought space and registering 61.00.

H4 timeframe:

Risk sentiment suffered Thursday, consequently dragging risk-sensitive currencies lower, including the Australian dollar and New Zealand dollar.

The one-way decline, south of resistance at 0.8021, drove AUD/USD into demand at 0.7848/0.7867, fastened above supports at 0.7843 and 0.7805.

H1 timeframe:

Thursday’s downside moves eventually overwhelmed buying interest off 0.79, allowing for a test of the 50.0% retracement level at 0.7865, plotted ahead of 0.7850 support. Lower, we see a reasonably clear run back to 0.78.

What’s also technically appealing is the RSI indicator dipping a toe in oversold territory and recording bullish hidden divergence.

Observed levels:

The combination of H4 demand at 0.7848/0.7867, together with the 50.0% retracement at 0.7865 and the 0.7850 support on the H1 may be a welcomed area by buyers today.

Though should 0.7850 cave, the 0.78 figure is likely in the firing range, a psychological support merging with the upper side of daily demand at 0.7806 and H4 support at 0.7805.

 

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle, buyers have attempted to find some grip in February, up by 1.5 percent.

Descending resistance (not considered traditional trendline resistance) governs the spotlight to the upside, etched from the high 118.66, whereas support inhabits 101.70.

Daily timeframe:

Supply at 106.33/105.78 came under fire in recent movement, as USD/JPY registered a third successive daily gain, despite declines witnessed in US equities (action that usually reinforces a JPY bid).

With buyers gaining confidence north of the 200-day simple moving average at 105.48, additional supply is worth taking into consideration at 107.58/106.85.

Additionally, RSI action remains healthy off 57.00 support, on the verge of shaking hands with overbought terrain.

H4 timeframe:

Unable to hold back buyers, resistance at 106.11 stepped aside on Thursday and was swiftly retested as support in recent hours.

This drew light towards the 127.2% Fib projection at 106.44, with a break uncovering Quasimodo resistance at 106.58.

H1 timeframe:

Quasimodo resistance at 106.27 entered the fight on Thursday, forcing a 106 retest. Upstream, the 127.2% Fib projection at 106.44 on the H4 is next in the line of fire, followed by 106.50 resistance.

Technically, we’re also seeing bearish divergence form out of the RSI.

Observed levels:

Chart studies suggest we’re heading higher in the short term, backed by the monthly timeframe’s technical picture and a somewhat fragile supply on the daily timeframe at 106.33/105.78. So, with that being said, a H1 bullish breakout theme could emerge above 106.27, with 106.44 (H4) and 106.50 resistance (H1) targeted.

 

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)

Following December’s 2.5 percent advance—movement that stirred major trendline resistance (2.1161)—February has refreshed 2021 highs at 1.4241, levels not seen for three years.

In terms of trend structure, however, the primary trend has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way—April high, 2018.

In effect, 1.4376 represents the next upside objective on the monthly chart.

Daily timeframe:

Sterling dropped sharply against the US dollar on Thursday, snapping a five-day bullish phase.

Largely driven by a surge in US Treasury yields backing a USD spike higher, GBP/USD retreated 1 percent and now flirts with support priced in at 1.4011.

The RSI rotated lower from 77.40 and exited overbought levels.

H4 timeframe:

Trendline support, extended from the low 1.3566, is now within a stone’s throw from making an entrance, intersecting with a 38.2% Fib level at 1.3982. Traders considering the trendline as a base for potential buying are urged to consider 1.3942/1.3900 demand (previous supply), as price could whipsaw through trendline support to collect fresh buyers off the aforementioned demand.

H1 timeframe:

1.41 put up little fight on Thursday, with price also overthrowing the 100-period simple moving average to the downside in strong fashion.

The pair, as you can see, settled around the key figure 1.40, a large psychological level that’s sponsored by a nearby 61.8% Fib level at 1.3985 and a 161.8% Fib projection at 1.3982, as well as Quasimodo support from 1.3959.

With reference to the RSI oscillator, you will also note the value entered oversold terrain, testing lows around 26.00.

Observed levels:

The combination of H4 trendline support and 38.2% Fib confluence at 1.3982, in addition to 1.40 support on the H1, alongside 61.8%/1.618% Fib confluence around 1.3985, could see short-term buying develop today.

What’s also supportive of a bid hitting the charts, of course, is the monthly chart trading north of trendline resistance and daily price crossing swords with support from 1.4011.