DXY off session peaks after US inflation data, eyes 90.00 support


EUR/USD:

Monthly timeframe:

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

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May also extended recovery gains, trading higher by 1.7 percent. June, however, is off to a mildly rocky start, down 0.4 percent as of current trade.  

April upside—alongside May’s optimism—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]). 

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Thursday, as you can see, wrapped up in the shape of a doji indecision candle. In light of the candle’s location on the chart (established within a mild range), this portrays a measure of caution in the market. 

In terms of where we stand on the chart’s framework, Quasimodo resistance at 1.2278 remains in the light, while, as stated in recent writing, navigating deeper water from current price underlines dynamic support around 1.1985: the 200-day simple moving average. 

Activity out of the RSI demonstrates the value attempting to hold on to support from 51.36, action following a deterioration from peaks fashioned just south of overbought status.

H4 timeframe:

In what was a somewhat choppy session—oscillating between gains and losses—EUR/USD ended the day mostly unchanged as the market digested upbeat US inflation data and ECB commentary. 

From a technical standpoint, the currency pair remains languishing south of the 61.8% Fib retracement at 1.2206, which made an entrance on Wednesday.

For those who read previous analysis you may note that the aforesaid Fib represents a second take-profit target derived from the recently completed AB=CD formation off the 100% Fib projection at 1.2123 (arranged just south of a 61.8% Fib retracement at 1.2094). 

Recent reports also highlighted additional areas to be watchful of on this timeframe: resistance at 1.2244 and demand coming in at 1.2044-1.2071, an area sharing chart space with a 1.618% Fib expansion at 1.2049.

H1 timeframe:

The bulk of yesterday’s movement occurred around the 100-period simple moving average at 1.2176.

This leaves resistance between 1.2211 and 1.22 on the table today (note the area houses the H4 timeframe’s 61.8% [AB=CD] Fib level at 1.2206), with a break perhaps unmasking two Quasimodo resistances at 1.2257 and 1.2241. Moves lower, on the other hand, throw light on 1.2132 support, followed by the psychological figure 1.21.

With regards to the RSI indicator, we are seeing the value explore space under the 50.00 centreline after flirting with peaks around 60.00ish.

Observed levels:

On the basis of short-term charts—H4 and H1—this market continues to echo a downward bias, largely as a result of the recent rejection from H1 and H4 resistances between 1.2211, 1.2206 and 1.22. As aired in Thursday’s technical briefing, this could mean a H1 close south of the 100-period simple moving average around 1.2176, with downside to perhaps hone in H1 support at 1.2132 and, with some oomph, maybe the 100% Fib projection at 1.2123 on the H4 and then the 1.21 figure.

AUD/USD:

Monthly timeframe: 

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

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support - 0.4776 low) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]). 

Daily timeframe: 

Technical structure unchanged from previous analysis.

The daily chart’s technical scenery is tedious.

Since April 20th—despite a fleeting whipsaw to a low of 0.7645—resistance at 0.7816 and support from 0.7699 continues to outline a defined range (yellow).  

Support at 0.7563 remains in view as a potential objective should sellers take the wheel, deriving additional (dynamic) support from the 200-day simple moving average circling 0.7538. Above 0.7816, supply falls in around 0.8045-0.7985. 

With respect to trend, we have been higher since the early months of 2020. However, we must take into account the currency pair has been mostly directionless since the beginning of 2021. 

The RSI shows the value engaging the 50.00 centreline, following last week slicing to 40.00s. North of here, we have trendline resistance, drawn from the peak 79.74.

H4 timeframe: 

The US dollar index (ticker: DXY) finished off best levels as recent US inflation data and ECB action failed to spark movement. 

Technically, however, AUD/USD derived modest support from 0.7726—Monday’s session low. In the event the market maintains a bid, Quasimodo resistance from 0.7782 is in the offing. Space under 0.7726, on the other hand, could guide price action as far south as 0.7632-0.7653 demand. 

H1 timeframe: 

For those who read Thursday’s technical briefing you may recall the following (italics):

Made up of a 38.2% Fib retracement at 0.7720, a 1.272% Fib expansion at 0.7723, a 100% Fib projection at 0.7728 and the 100-period simple moving average around 0.7727, the 0.7720-0.7728 area welcomed price movement in recent hours and stirred a bullish vibe (note the hammer formation).

As you can see, the unit held its bid-on-dip scenario from 0.7720-0.7728 support on Thursday, scaling to a high of 0.7763 and highlighting supply at 0.7783-0.7771 (holds H4 Quasimodo resistance within at 0.7782, and is situated under 0.78 [H1]). Territory south of noted Fib structure draws attention to 0.77, a psychological base in the company of a 61.8% Fib retracement at 0.7692.

As for the RSI indicator, overbought space is plotted nearby, possessing obvious resistance from 72.21.

Observed levels:

Prime focus is on H1 supply at 0.7783-0.7771. Recognising the area shares space with H4 Quasimodo resistance at 0.7782, bearish activity could develop from this neighbourhood.

Bearish interest, however, may also want to consider the 0.78 figure. Not only is this a widely watched level, daily resistance is located nearby at 0.7816.

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 and February’s outperformance, March concluded up by 3.9 percent and cut through descending resistance, etched from the high 118.66. 

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May (+0.2 percent) held the breached descending resistance, echoing potential support for the month of June, currently trading higher by 0.2 percent. 

Daily timeframe: 

Technical structure largely unchanged from previous analysis.

Long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19) remains centre of attention on the daily timeframe, with downside flow targeting 108.60ish lows (green oval), followed by supply-turned demand at 107.58-106.85.

Trend studies, nevertheless, reveal the pair has been trending higher since the beginning of April. Subsequent months has witnessed a sizeable retracement, followed by an attempt to recapture higher levels. 

The RSI is stationed under resistance at 57.00, yet currently challenging the 50.00 centreline. Should a break lower materialise, oversold might be in store, eyeing support at 28.19.

H4 timeframe:

Although demand at 109.02-109.20 motivated bullish activity at the beginning of the week, USD/JPY came under renewed pressure Thursday and has price loitering within a stone’s throw of the noted demand base. The key point to be mindful of is should we shake hands with this demand once more, trendline support, drawn from the low 107.48 intersects with the upper side of the demand and may trigger another bullish attempt.

Failure to hold the current demand, technical attention shifts to another layer of proven demand printed at 108.20-108.43.

H1 timeframe:

Following an earlier bull trap—movement in which price spiked to highs of 109.79 and deceived breakout bulls north of the previous higher high at 109.67—the technical pendulum swung in favour of sellers, with price toying with space a touch north of demand at 109.07-109.19 (set within H4 demand at 109.02-109.20), which is positioned within striking range of the 109 figure. 

Information derived from the RSI informs traders that momentum is on the verge of entering oversold space, a zone between 0 and 30.00 which indicates extreme levels (gone too far in a particular direction according to the indicator) and a place where a reversal could emerge.

Observed levels:

The combination of the 109 figure, H1 demand at 109.07-109.19, H4 demand at 109.02-109.20, and H4 trendline support, extended from the low 107.48, could provide enough technical evidence to encourage a bullish reaction should the aforementioned area be tested today. 

What’s also interesting is the H1 and H4 zones are supported by monthly action balancing off descending resistance-turned support.

GBP/USD: 

Monthly timeframe: 

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

The pendulum moved in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent).

May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent. June, however, is somewhat depressed (down 0.2 percent), albeit recording fresh YTD peaks at 1.4250.

Despite the trendline breach (which could serve as support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018). 

Daily timeframe: 

Technical structure unchanged from previous analysis.

Versus the US dollar, sterling ended Thursday on the front foot, following upbeat inflation data out of the US and recent ECB commentary.

Quasimodo resistance at 1.4250 and support at 1.4003 remain pivotal barriers on the daily chart. 

Demand at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance—is also perhaps on the radar.

Interestingly, trend in this market has remained to the upside since March 2020.

Trendline support, taken from the low 36.14 on the RSI, gave up position last week with recent action cruising within range of the 50.00 centreline. 

H4 timeframe:

Technical structure unchanged from previous analysis.

Since mid-May, the H4 chart has been busy carving out a consolidation between 1.4096 and 1.4219. In spite of a handful of whipsaws (fakeouts beyond range extremes are common), the range remains intact. As evident from the chart, Thursday, although whipsawing the lower side of the aforesaid range, produced an almost one-sided recovery to a high of 1.4178.

Technical structure above the consolidation has daily Quasimodo resistance from 1.4250 in place; below the range, the chart points to trendline support, drawn from the low 1.3668, and support priced in at 1.4007.

H1 timeframe:

Support from 1.4078 welcomed price movement on Thursday, following a rapid push through 1.41 bids. Subsequent action witnessed GBP/USD reclaim 1.41+ status and dethrone the 100-period simple moving average around 1.4148.

Despite mild selling, as we write, resistance could potentially form at 1.42, with a break uncovering additional resistance coming in at 1.4246.

The picture from the RSI shows the value nearing the oversold range, in particular resistance at 71.00ish.

Observed levels:

The 1.42 figure based on the H1, dovetailing closely with the upper side of the H4 range at 1.4219, forms potential resistance. The caveat, of course, is a possible whipsaw forming to test daily Quasimodo resistance at 1.4250.

With scope to pilot higher levels, an alternative short-term scenario to be mindful of is H1 retesting the 100-period simple moving average around 1.4148 and driving moves to 1.42.

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