June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows

June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows, FP Markets

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, support at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close. May traded higher by 1.7 percent.

April upside—alongside May’s gains—throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

Partly modified from previous analysis.

Friday’s test of Quasimodo resistance-turned support at 1.2169, established in the shape of a dragonfly doji candlestick pattern (bullish signal), welcomed moderate upside on Monday.

Despite holiday-thinned liquidity (US and UK), the US dollar index (ticker: DXY) navigated deeper water and elevated Europe’s shared currency.

Although the RSI displays bearish divergence, EUR/USD trend studies suggest further upside is favourable (trending higher since March 2020) which reinforces the recent bullish narrative. A buy-on-dip scenario, therefore, appears underway, taking aim at Quasimodo resistance from 1.2278.

H4 timeframe:

As anticipated, EUR/USD extended recovery gains on Monday, following Friday’s healthy bid from a 61.8% Fib level at 1.2133 heading into US hours—stationed just north of another 61.8% Fib level at 1.2125.

Resistance is parked at 1.2244, a handful of pips south of the daily Quasimodo resistance level underlined above at 1.2278.

H1 timeframe:

For those who read Monday’s technical briefing you may recall the following (italics):

In conjunction with the bigger picture, H4 displays scope to approach resistance at 1.2244. With H1 testing the resolve of 1.22 offers Friday, the technical outlook suggests a break of this psychological level early week, leaning towards H1 supply drawn from 1.2240-1.2228, sited just south of H4 resistance mentioned above at 1.2244.

As evident from the H1 chart, despite a brief consolidation beneath 1.22, US trading hours on Monday witnessed EUR/USD bulls adopt an offensive phase and overthrow the 100-period simple moving average at 1.2205 to shake hands with supply from 1.2240-1.2228. Upstream, technicians will note Quasimodo resistance resides close by at 1.2257, sharing chart space with a 1.618% Fib expansion at 1.2249 as well as a 100% Fib projection at 1.2257.

Interestingly, out of the RSI, we are seeing upside momentum somewhat level off ahead of overbought space. Should the value enter 70.00, resistance calls for attention around 78.97.

Observed levels:

Longer term reveals a reasonably healthy uptrend (since early 2020). Together with monthly making its way out of demand at 1.1857-1.1352 in April, and the daily timeframe displaying scope to approach Quasimodo resistance at 1.2278, EUR/USD bulls may remain in the driving seat for the time being.

Short term shows H4 price closing in on resistance at 1.2244, implying H1 could run through supply at 1.2240-1.2228 and perhaps cross swords with H1 Quasimodo resistance at 1.2257 (reinforced by Fibonacci studies). Therefore, technical expectations show a possible (short-term) bearish attempt forming around 1.2250ish.

June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows, FP Markets

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Should a bearish scenario unfold, support at 0.7394 is featured to the downside, with additional downside pressure targeting demand at 0.7029-0.6664 (prior supply).

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Unchanged technical view from previous analysis.

Despite rupturing resistance at 0.7816 early May, the level maintains its position on the daily chart. Interestingly, since April 20th, AUD/USD has offered a non-committal tone, consolidating between the aforementioned resistance and support from 0.7699 (yellow). Of late, however, the currency pair shook hands with the lower wall of the aforementioned range.

Below the consolidation, technicians have support at 0.7563 in sight.

With respect to trend, though, we have been higher since the early months of 2020.

Out of the RSI, the indicator remains flirting with space south of the 50.00 centreline, following a dip from 60.30 peaks in May.

H4 timeframe:

Risk currencies were among the outperformers on Monday against a broadly softer USD. AUD/USD, as you can see from the H4 scale, built on Friday’s modest recovery from 0.7696-0.7715 support (served as support and resistance since the end of January), clocking session tops around 0.7741.

Overhead, Quasimodo resistance at 0.7782 is calling for attention, with a break unmasking daily resistance at 0.7816. Below 0.7696-0.7715, however, demand is featured at 0.7632-0.7653.

H1 timeframe:

Early hours Monday watched a muscular close establish north of Quasimodo support-turned resistance at 0.7714, which led to price action crossing paths with the 100-period simple moving average at 0.7740ish. Until now, the SMA has delivered a ceiling of resistance.

Upstream, Quasimodo resistance is visible at 0.7755, closely shadowed by supply coming in from 0.7783-0.7771 (houses H4 Quasimodo resistance at 0.7782).

The RSI value rotated south on Monday, leaving overbought territory unchallenged and testing the 50.00 centreline. Crossing beneath the latter signals the possibility of downside momentum, with the indicator potentially taking aim at oversold space.

Observed levels:

Technically, two possible scenarios are on the table today.

  1. H1 continues to retreat and revisits support at 0.7714 (with a possible whipsaw into 0.77 bids). A bullish theme from here could emerge, having seen room on the H4 timeframe to advance as far north as Quasimodo resistance at 0.7782, and the daily timeframe rebounding from the lower side of a month-long range at 0.7699.
  2. H1 dethrones the 100-period simple moving average around 0.7740—reinforced on the back of the daily timeframe’s support at 0.7699—and attempts to reach for H1 Quasimodo resistance from 0.7755.

June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows, FP Markets

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, May held the breached descending resistance, echoing potential support.

Daily timeframe:

As highlighted in Monday’s technical briefing, a few pips shy of long-term resistance at 110.94-110.29 (posted under supply at 111.73-111.19), we witnessed price fade gains on Friday and shape what’s known as a shooting star candlestick pattern (bearish signal).

The above fed a bearish theme on Monday, reaching session lows of 109.35. 108.60ish lows (circle) represent a logical roadblock, followed by supply-turned demand at 107.58-106.85.

Trend studies reveal the pair has been trending higher since the beginning of 2021.

The RSI recently nudged above resistance at 57.00, with the value now retesting the aforementioned level as possible support. Holding this base shifts attention to the possibility of further upside momentum into overbought terrain and resistance at 83.02.

H4 timeframe:

In line with the US dollar index (ticker: DXY), USD/JPY explored deeper terrain on Monday and slipped back under support from 109.71 (now stands as resistance).

Demand at 109.02-109.20—a decision point to initially push above 109.71 resistance and aligns closely with trendline support, drawn from the low 107.47—is next in view should sellers demand further control today.

In the event the currency pair reclaims 109.71 resistance, the technical radar is fixed on supply at 110.85-110.46, secured within daily resistance at 110.94-110.29 and joined by a H4 100% Fib projection at 110.59 as well as a 1.618% Fib expansion at 110.69.

H1 timeframe:

Quasimodo resistance-turned support at 109.45, as well as intersecting trendline support, pencilled in from the low 108.56, and the 100-period simple moving average at 109.38, made an entrance on Monday, following a one-sided decline through 109.50.

Lower on the curve, demand is seen at 109.07-109.20, sharing chart space with a 61.8% Fib level at 109.20 (set within the upper range of H4 demand at 109.02-109.20).

From the RSI, the value rebounded from oversold levels on Monday (at the time price action connected with 109.45 support) and is seen climbing 40.00, as we write.

Observed levels:

While an attempt to hold H1 support at 109.45 is underway, and despite the level joining hands with additional support (trendline formation and the 100-period simple moving average), the H4 timeframe echoes a possible continuation lower to cross paths with demand at 109.02-109.20 (contains H1 demand within its upper range at 109.07-109.20) before buyers make any serious attempts to push higher.

Of course, any bullish move is supported by the monthly flow trying to forge support off a recently breached descending resistance line.

June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows, FP Markets

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. May, despite diminished volatility during March and April, traded firmly on the front foot, up by 2.8 percent and closed near YTD highs.

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Unchanged technical view from previous analysis.

Buyers and sellers have been squaring off (consolidating) a touch south of Quasimodo resistance at 1.4250 since May 18th, following an earlier 1.4003 support retest.

Renewed interest to the upside will see 1.4250 likely attempt to form a ceiling, though a break throws light on the 1.4376 April 2018 high (see monthly analysis). South of support at 1.4003, demand resides at 1.3857-1.3940—an important technical area where a decision was made to break above 1.4003 resistance.

Trend in this market has remained firmly to the upside since March 2020.

The RSI informs traders that upside momentum is levelling off, movement which may have trendline support, taken from the low 36.14, make an entrance.

H4 timeframe:

Unchanged technical view from previous analysis.

GBP/USD remains within a defined range at 1.4105-1.4219.

Having noted the overall trend faces a northerly trajectory, a break to the upside to cross swords with the daily Quasimodo resistance at 1.4250 could be on the cards.

Of technical note is also a H4 61.8% Fib level at 1.4092 and a nearby trendline support, taken from the low 1.3668.

H1 timeframe:

Similar to the H4 scale, we can see short-term H1 traders have been playing the range between 1.42 and 1.41 since mid-May. As you can see, though, Monday rallied above 1.42 and, in recent hours, retested the psychological figure as support, suggesting movement towards double-top resistance around 1.4246 is in store.

From the RSI, we can see the value is now retesting resistance-turned support at 56.58. Overbought could be targeted today, in particular resistance at 84.66.

Observed levels:

Unchanged technical view from previous analysis. Scope to advance on the monthly scale to 1.4376—as well as a defined uptrend visible on the daily timeframe since pandemic lows around March 2020—shows the daily chart’s Quasimodo resistance at 1.4250 is perhaps vulnerable.

Knowing the bigger picture suggests higher levels, and seeing H1 retesting 1.42 as support, this may encourage a buy-the-dip theme to at least H1 resistance at 1.4246. This, of course, would entail breaking the upper side of the H4 range at 1.4219.

June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows, FP Markets

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  • June 1st 2021: Dollar Index Records Second Monthly Loss, Zeroing in on YTD Lows, FP Markets
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