US dollar bears take over, but upside potential eyed ahead of Fed

US dollar bears are moving in at the start of the week.
The bulls will seek a break of the M-formation's tops with the Fed eyed.

Ross J Burland FXStreet

The US dollar will be a major focus in markets this week in the countdown to the Federal Reserve. The greenback attempted a breakout to the upside but failed to pick up any lasting commitment from the bulls and is now in the hands of the bears for the open. The greenback did however register a gain for the week as traders remain in anticipation that the Fed will stick to its aggressive rate hiking policy when the Federal Open Market Committee's board members meet to agree on the next rate hike.

The US dollar measured against a basket of currencies as per DXY, declined 0.1% on the day to 109.68. It reached a two-decade high of 110.79 earlier this month. For the week, it was up 0.6%, and it is up about 15% for the year so far. On Monday just ahead of the Tokyo open, the index is down 0.13% to 109.508 so far.

DXY daily and H1 charts

The price has rallied hard and broken through prior resistance that is now acting as support on the daily chart. However. it could bleed out some more into a 38.2% Fibonacci retracement as illustrated prior to the next bullish impulse.

The hourly chart's M-formation shows that the price is indeed headed lower in the open which solidifies the meanwhile bearish bias.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.