Dollar bulls were missing in action, even after Federal Reserve Chairman Jerome Powell stated during his Senate confirming hearing that the central bank was likely to raise interest rates this year. Given all the hype and mounting anticipation around the U.S. inflation data on Wednesday afternoon, the next few hours could become tense and nervy. We could experience a calm before the raging storm with dollar volatility certainly on the cards. In the meantime, this will be another evening where I wear my technical analysis hat, searching for potential trading setups on dollar crosses before the big event tomorrow!
Dollar Index (DXY) approaches support
The DXY is inching closer to the 95.50 support level on the daily charts. A strong daily close below this level may open the doors towards 95.00 and 94.56. Should 95.50 prove to be reliable support, a rebound back towards 96.40 and 96.60 could become reality.
EURUSD same old story…
It pretty much felt like watching paint dry when looking at the EURUSD’s recent price action.
The currency pair remains trapped within a range with support at 1.1200 and resistance at 1.1370. A breakout could be on the horizon with a fresh fundamental catalyst getting the gears moving. Should bulls break above 1.1370, prices could test 1.1460 and 1.1530, respectively. A decline back below 1.1280 could signal a selloff towards 1.1200.
GBPUSD pushes higher
The GBPUSD has hit its highest level since November 4th.
Pound bulls remain supported by expectations over the Bank of England raising interest rates as early as next month. Talking technical, the upside momentum may push prices towards 1.3670 and 1.3750. Should 1.3570 prove to be unreliable support, prices may decline back towards 1.3500 and 1.3410.
AUDUSD set to head north?
After creating a new higher low at 0.7129, bulls seem to be back in action.
However, the road ahead could be rocky and filled with a couple of obstacles. The MACD remains flat while resistance can be found at 0.7280 which is just above the 100-day Simple Moving Average. If bulls tire before reaching this point, prices may decline back towards 0.7180 and 0.7129.
USDJPY lingers below 115.50
It will be interesting to see whether the USDJPY can push back above 115.50 or use this level as resistance to trade lower.
Sustained weakness below 115.50 could trigger a selloff towards 114.50, 114.00, and 113.360, respectively. Should bulls break above 115.50, this could suggest the resumption of the uptrend. Such an outcome may open doors towards 116.00, 116.30, and 117.40.
By Lukman Otunuga Senior Research Analyst
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