When the S&P's, Gold and DXY was last visited January 2020. GOLD, S&P's and DXY all traded above 5 year averages. An imbalance existed as the correct relationship is either DXY and GOLD remain above 5 year averages or the S&P's must drop below 5 year averages.

Inversely, DXY amd GOLD must trade below 5 year averages and the S&P's above. DXY and Gold as non risk assets and considered the safety trade must be misaligned to the risk asset of the S&P's.

DXY now at 93.00's, broke below its 5 year average at about 96.45 while GOLD at 1.1311.12  and the S&P's at 3041.91 trades above 5 year averages. To align properly, either Gold trades below its 5 year average to meet its proper counterpart DXY or both must break above and the S&P's must break below.  Gold is currently the outlier and imbalanced inside the USD mix.

The affect to DXY below its 5 year average is 8 of 28 currency pairs now trade above 5 year averages as follows; EUR/USD, EUR/CAD, USD/CAD, AUD/CAD, EUR/NZD, EUR/AUD, EUR/GBP and CHF/JPY. Most vital to this list is recent converts to break 5 year averages, EUR/USD and AUD/CAD. As DXY broke below its 5 year average, its only correct and natural for EUR/USD to break above at current 1.1286.

AUD/CAD at 0.9594 is trading directly at its 5 year average. This would explain AUD/USD partial ability to trade higher and higher into deep overbought. AUD/USD's big test is here at its 5 year average at 0.7283. AUD/USD assistance is AUD/EUR at current 0.6084 remains firmly below its 5 year average and informs a much lower AUD over time will trade. When DXY as the main driver to all currency prices, broke its 5 year average allowed the Non USD pairs to travel higher.

DXY 96.45 coincides to EUR/USD at 1.1286.

The S&P's extreme prices and short points are located  3294.54, 3315.98 and 3326.20 to target points at 3198.28, 3195.70, 3188.78, 3149.97 and 3167.93. Current S&P's opens at 3258.44 and about 50 points to extremes. At 3294 coincides to short EUR/USD as both achieve deeply overbought status at extremes.

For today's EUR/USD daily short trade is located at 1.1812 to target right at 1.1717. Longer term, short points are located at 1.1822, 1.1807 and 1.1777 to target 1.1477 on a break of 1.1597.

Trading currencies and other financial instruments carries a degree of loss and possible loss of entire investments. Please managed your own risks, stop loss, and margins requirements.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

AUD/USD weaker ahead of RBA’s monetary policy decision

The Aussie is weak, despite receding dollar’s demand and the robust performance of US indexes. Coronavirus developments hit the commodity-linked currency ahead of the RBA.

AUD/USD News

Gold: This just might be as good as it gets for gold

The price of gold is trading at $1,975 within a range of between $1,960.54 and $1,986.76 at the time of writing, virtually flat on the day in consolidation having eeked out a fresh all-time high.

Gold News

USD/JPY struggling to retain the 106.00 level

The USD/JPY pair traded as high as 106.46 on Monday but struggles to retain gains above the 106.00 level amid lack of dollar’s demand.

USD/JPY News

Ethereum on its way to regaining $400 while BNB hit a new high at $22.5

BTC/USD is more stable than other coins right now but has been able to recover from its crash towards $10,500. It is currently trading at $11,369 and faces very little resistance until $14,000.

Read more

WTI drops below $40 on demand worries, OPEC+ output increase

Crude oil prices posted losses last week and seem to be struggling to shake off the bearish pressure on Monday. As of writing, the barrel of West Texas Intermediate (WTI) was trading at $39.85, losing 1.5% on a daily basis.

Oil News

Forex Majors

Cryptocurrencies

Signatures