In European trading Tuesday, the U.S. dollar index.DXY continued to fall, falling below its previous key support of 92.50 to as low as 92.47. Euro/DOLLAR rebounded, rising as high as 1.1915; GBP/USD rose 0.5% to a high of 1.3175; The dollar continued its slide against the yen, falling as low as 105.39; Spot gold surged again, peaking at $9, 995 an ounce. Spot silver rose even more sharply, peaking at $28.339 an ounce.
On the news side, the US election, the situation in China and the US, the bipartisan stimulus package in the US Congress, and the grim situation of the global epidemic are all likely to affect market sentiment and trigger a drought. For the euro, sterling, Yen, Australian dollar, Canadian dollar and other technical trends, and look at the latest technical analysis report:
Euro: In technical terms, the euro rose for a sixth straight day against the dollar on Tuesday, extending a rally since last week’s low of $1.1700 and maintaining a bullish stance. In addition to the continued dollar sell-off, the early release of the Novel Coronavirus vaccine raised hopes of a modest recovery in the euro zone, leading to strong demand for risky assets and giving the euro additional support.
A break above 1.1916 would point to 1.1996 and 1.2032 (the 23.6 percent Fibonacci retracement of the 2017-2018 uptrend). On the other hand, initial support is at 1.1695, then 1.1495 and 1.1448 (the 50% Fipo retracement of the 2017-2018 rally).
Sterling: The pound rose for a fourth day ahead of the crucial seventh round of post-Brexit talks as the dollar fell. Technically, however, sterling still faces the possibility of re-testing Wednesday’s low of $1.30 unless it breaks through 1.32.
In terms of sources, the BBC quoted British Prime Minister Boris Johnson as saying to maintain hopes of a trade deal next week, but according to the Daily Mail, Britain will not accept adherence to EU rules in tomorrow’s Brexit negotiations.
Although today’s meeting was the last scheduled, policymakers had earlier indicated a willingness to extend discussions into September if necessary. According to the BBC, after the last round of talks in London, The EU’s chief negotiator Michel Barnier said a deal would need to be reached by October “at the latest” in order to be approved before the current brexit transition period ends in December.
Yen: UOB foreign exchange strategist now sees dollar/yen retreating further to 105.30. The bank believes the exchange rate would have to fall significantly below 105.30 to move towards 104.50, and may re-test the July low of 104.16. Overall, the exchange rate is expected to remain under pressure unless it returns above 106.65.
Australian dollar: Benefited from a broad sell-off in the US dollar, Australian dollar/US dollar rebound. On a technical level, technical indicators have shifted in favor of bulls, suggesting more upside, and are expected to break through the 0.7241 level of horizontal resistance. The 50-hour simple moving average crosses the 200-hour simple moving average online, adding credibility to the spot market upside view.
The next upside target is 0.7285, which is the February 2019 high. Meanwhile, any pullback will find strong support at the 21-hour SIMPLE moving average of 0.7210 and a break below the 50-hour simple moving average of 0.7189 will be tested.
The Canadian dollar: THE U.S. dollar/Canadian dollar fell further below the 1.3200 mark, at one point falling to a near seven-month low. After falling the previous day, the U.S. dollar/Canadian dollar saw a second straight session of strong follow-through selling on Tuesday as the selling tone around the U.S. currency was strong.
Analysts said uncertainty over the next round of us fiscal stimulus, combined with falling Treasury yields and weaker US macroeconomic data on Monday, had forced investors to continue selling the dollar. In addition, a sustained break below 1.3200 could trigger some stop-loss selling, which appears to have pushed the GREENBACK to its lowest level since late January.
Dollar index.DXY: The dollar index.DXY fell for a fifth straight session, opening the door for further weakness to break below its previous key support level of 92.50.
In fact, investors continue to favor riskier assets over the next trading day, putting additional selling pressure on the dollar. From the political scene in the United States, the Democratic National Convention begins on Monday with President Trump’s mishandling of the coronavirus crisis at the center of the debate. And there has been no progress on another fiscal stimulus.
Technically, if the dollar falls below 92.50, then the next support level is 91.80 and then 89.23. On the other hand, a break above 93.99 will see 94.20(38.2% of 2017-2018 Fibonacci retracements) followed by 96.03(50% of 2017-2018 Fibonacci retractions).
Gold: Gold extended its rally and broke through the $2,000 barrier, closing Monday above its key 100-hour average of $1,941. Gold bulls continue to benefit from a weak dollar and falling Treasury yields.
Dhwani Mehta, an analyst at FXStreet, believes the yellow metal will continue to receive support for broad-based dollar weakness amid falling Treasury yields and market nervousness ahead of Wednesday’s FOMC minutes.
Above 2000, gold could test its August 11 high of $2,030. A sustained break above the $2,050 level is crucial for buyers to break the all-time high of $2,075 again. This level is where the Aug. 10 high meets the psychological level.
Previous resistance is now turning to support at $1985.50, which will limit gold’s downside. The next support is around $1,982 above the uptrend line, and if it breaks below that, the 21-hour average of $1,976 May be tested. Gold would need to break below its upward 100-hour average of $1,958 to offset its short-term bullish bias.
Silver: Compared with gold, silver seems to be doing even better. On a technical level, technical indicators suggest that if silver does not succeed in breaking the monthly high of 29.91, it could fluctuate in the short term or within the range of flag resistance and support. If the subsequent RSI index succeeds in breaking the 70 level, it could be accompanied by silver prices breaking new highs for the year.
Silver is expected to swing sideways toward an extended upward path of 24.18 and the year’s low of 11.64 before resuming its accelerating rally to revisit the psychologically important $30 an ounce mark. It is important to note, however, that recent corrections in silver prices tend to be fleeting, so investors should keep a close eye on developments in the RSI indicator as it looks likely to return to overbought territory.