Valuation Signals Leave USD Vulnerable to the Downside
The USD has undergone a significant advance since late November. However this advance has pushed USD valuations to overbought extremes against most currency pairs. Given this development, it would be beneficial to identify some key price levels which, if penetrated, would likely trigger additional short-term USD weakness.
DXY: With the daily studies issuing a sell signal from their most overbought levels since January 2009, a daily close below support at 77.33 would project additional losses toward 75.88 and 75.09. Resistance is located at 78.16/78.45 and against the 200-day moving average at 78.93.
EUR/USD: Holding above the 200-day moving average at 1.4238 after the daily studies moved to an oversold extreme. A daily close above 1.4458 would trigger a retracement phase in this regard, highlighting 1.4628 and 1.4802 thereafter. Support is located at 1.4265/1.4238, followed by 1.4177.
GBP/USD: Currently hugging the 200-day moving average at 1.6089. Prices will have to close above the short-term double top at 1.6237 in order to propel the Pound higher, with additional resistance located at 1.6409. Key support for any hope of a price base is located at 1.5842.
USD/JPY: With a mild bearish divergence forming on the daily studies from overbought levels, a daily close below 91.15 would project additional losses toward Ichimoku Cloud support at 88.68. Resistance is located at 93.14 and 95.05.
USD/CHF: Must pierce support at 1.0280 in order to add to downside price momentum that would highlight 1.0184. Resistance is located at 1.0411 and 1.0507.
USD/CAD: Yesterday’s close below 1.0419 opens up 1.0238 and 1.0056 on the downside. Initial resistance comes in at 1.0419 and 1.0503 – with a close above 1.0599 required in order to nullify the intermediate downtrend.
AUD/USD: Must pierce resistance at 0.9180 in order to sustain the recent advance and highlight 0.9323. Support is located at 0.8963 and 0.8735.
NZD/USD: Close above resistance at 0.7306 has produced a bullish trend reversal that highlights 0.7524, followed by the cyclical high at 0.7633. Support is located at 0.7181 and 0.6946
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