EURUSD rallied more than 1% over the previous trading day amid a broad-based Dollar sell-off. The short-term U.S. 10-year treasury yield retreated back 3.8% and is currently trading at 3.737%. Market participants rotated out of the U.S. Dollar into equities as equity markets rebounded off of fresh lows. All major U.S. equity indices rose more than 1%. A 75 basis point interest rate hike by the ECB is now being entertained as the E.U. continues to struggle with soaring inflation.
On the technical side, EURUSD has rebounded strongly off of our previously estimated support level of 0.96. Should the Dollar continue to weaken, EURUSD could head back above the 0.97 price region. RSI for the pair sits at 39.8, as of writing. On the four-hour chart, EURUSD currently trades below its 50, 100, and 200-day SMA.
Resistance: 1.0011, 1.0055
Support: 0.9550, 0.9400
Cable rallied 1.45% over the previous trading day. The decision by the BoE to restart its bond purchasing program to control the Pound’s recent freefall has allowed the Pound to rise against the U.S. Dollar. The BoE’s plan to purchase longer-dated bonds to stabilize its currency, however, has attracted many criticisms, including comments from the IMF. The short-term decision by the BoE continues to raise our previous concerns about the health of British credit. Further widening its credit deficit could put the British economy under tremendous stress; furthermore, members of the British Finance ministry have come forward to confirm that there are no plans to reverse the cancellation of its latest tax policy.
On the technical side, GBPUSD has found support just below our previously estimated support level and is now consolidating around the 1.08 price region. Short-term resistance for the pair stands at the 1.1 price region. RSI for this pair sits at 29.34, as of writing. On the four-hour chart, GBPUSD currently trades below its 50, 100, and 200-day SMA.
Resistance: 1.1561, 1.1854
Support: 1.08, 1.053
Gold rebounded more than 1.8% over the previous trading day. The precious metal saw a surge in price as the U.S. Greenback witnessed a broad-based sell-off. The non-yielding metal found momentum as market participants rotated out of the Dollar and into equities. The macroeconomic environment for the yellow metal, however, remains unchanged. While Gold bulls can find a day of breathing room and profit-taking space, the short-term upward movement of Gold does not suggest a break away from its recent downward trend. Market participants will be paying close attention to the U.S. GDP data, scheduled to be released during today’s American trading session.
On the technical side, XAUUSD rebounded strongly from our previously estimated support level of $1619 per ounce and is now trading above our higher level of support for Gold at $1660 per ounce. Note that $1,660 could change polarity and become a short-term resistance for Gold. RSI for this pair sits at 35.7, as of writing. On the four-hour chart, XAUUSD currently trades above its 50-day SMA but below its 100 and 200-day SMA.
Resistance: 1695, 1724
Support: 1619, 1600