August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session

August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session, 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)

Thanks to June’s 3.0 percent loss, support at $1.1857-1.1352 entered the frame. A bullish revival shines light on 2021 peaks at $1.2349; additional enthusiasm welcomes ascending resistance (prior support [$1.1641]).

Month to date, August trades 1.3 percent lower.

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

Daily timeframe:

Technical structure largely unchanged from previous analysis

The US dollar—as measured by the US dollar index—extended recovery gains on Tuesday, underpinned amid speculation the US Federal Reserve could begin tapering its bond buying activities.

EUR/USD, therefore, explored deeper terrain and eked out additional losses. Consequently, the currency pair is shaking hands with the upper edge of a breached falling wedge (between $1.1847 and $1.1975), plotted nearby Quasimodo support at $1.1688.

It’s important to recognise 31st March low at $1.1704 is arranged above the Quasimodo—sell-stops, therefore, are likely positioned below here and may entice buyers into the market from the aforesaid Quasimodo and falling wedge base.

With regards to long-term trend, we have been somewhat directionless since the beginning of the year, despite healthy gains in 2020.

Drawing on the relative strength index (RSI), we can see the indicator threatening to enter oversold territory. This follows the recent trendline support breach, taken from the low 27.11. Movement into oversold unlocks a potential bullish comeback.

H4 timeframe:

After ousting 21st July low at $1.1751 on Monday, in addition to Tuesday puncturing Quasimodo support at $1.1720, this unmasks a 100% Fib projection at $1.1680 (represents an AB=CD bullish pattern) and a 1.618% Fib extension at $1.1650.

It must be noted that should the unit cross swords with $1.1650-1.1680, willing buyers will be potentially in short supply having seen an established downside bias since June.

H1 timeframe:

Latest technical developments out of the H1 scale reveal EUR/USD addressed Quasimodo support from $1.1711, and established a minor close north of trendline resistance, drawn from the high $1.1900. Of note is $1.17 plotted directly beneath the support.

Upstream, assuming buyers attack space above trendline resistance, exhibits scope to approach supply coming in at $1.1766-1.1754.

Despite the relative strength index (RSI) struggling to find acceptance above resistance at 36.94, the indicator is chalking up bullish divergence which shows decreased average losses versus average gains. This is a signal buyers might be gearing up to make a show. Crossing above 36.94, of course, would help validate this observation.

Observed levels:

The monthly timeframe testing support at $1.1857-1.1352 may drive bullish interest from the daily timeframe’s breached falling wedge. This—coupled with H1 action rebounding from Quasimodo support at $1.1711 and breaching trendline resistance, taken from the high $1.1900—could encourage a short-term pullback to H1 supply at $1.1766-1.1754. However, traders are urged to pencil in the possibility of a dip to $1.17 before buyers attempt to climb.

August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session, FP Markets

AUD/USD:

Monthly timeframe:

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

Following June’s 3.0 percent decline, and July tumbling 2 percent, this positions demand at $0.7029-0.6664 in sight.

Month to date, August is up 0.1 percent.

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

Daily timeframe:

Technical structure unchanged from previous analysis

Resistance at $0.7453-0.7384 remains central focus, capping upside since 22nd July. The next downside objective falls in around a 1.272% Fib projection at $0.7273, followed by support at $0.7204.

Ground above the aforementioned resistance area brings light to the 200-day simple moving average at $0.7602, a dynamic value sheltered south of resistance at $0.7626.

With respect to trend, 2021 is underwater right now, emphasised by the close below the 200-day simple moving average at the beginning of July. Concerning momentum, the relative strength index (RSI) is on the doorstep of resistance at 41.63, which if a break comes to pass shines light on the 50.00 centreline.

H4 timeframe:

Meanwhile, lower on the technical curve, H4 movement confronted the head and shoulder’s profit objective at $0.7328 (the pattern emerged around the lower side of a 38.2% Fib retracement at $0.7408) yesterday, and, with the help of Fibonacci structure between $0.7293 and $0.7315, staged a minor pullback into the close.

Sustained bullish interest shifts attention back to $0.7408.

H1 timeframe:

Quasimodo support at $0.7323 made a show on Tuesday, action motivating a short-term bullish phase to within touching distance of trendline support-turned resistance, extended from the low $0.7289, and the 100-period simple moving average at $0.7366.

The relative strength index (RSI) made its way above the 50.00 centreline in recent trading and is bound for a potential test of overbought space. Above 50.00 informs traders that momentum, or relative strength, is to the upside: average gains exceed average losses.

Observed levels:

Similar to Tuesday’s technical briefing, higher timeframes reveal the monthly chart has space to attack lower price levels, placing daily resistance at $0.7453-0.7384 in a favourable light. The daily timeframe’s 1.272% Fib projection at $0.7273, therefore, could call for attention.

With the bigger picture in mind, a test of H1 trendline support-turned resistance, extended from the low $0.7289, could bring about technical selling interest, refocusing attention on H1 Quasimodo support at $0.7323 and possibly $0.73.

August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session, FP Markets

USD/JPY:

Monthly timeframe:

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

Since April retested descending resistance-turned support, etched from the high ¥118.66, price action has maintained moderate support. Pursuing higher levels could eventually strive for long-term supply at ¥126.10-122.66.

Month to date, August trades 0.8 percent in the green.

Daily timeframe:

Technical structure unchanged from previous analysis

In response to Monday preserving a bullish position north of local trendline resistance-turned support, forged from the high ¥111.66, Tuesday, boosted amidst rising US Treasury yields, unearthed a healthy bullish close.

As aired in Tuesday’s technical briefing, upside targets can be seen at resistance from ¥111.88-111.20 and neighbouring supply at ¥112.68-112.20.

When it comes to trend, USD/JPY has been higher in 2021.

Resistance at 54.00 was overrun yesterday, according to the relative strength index (RSI), showing traders that momentum is directed to the upside and a move to overbought could come about.

H4 timeframe:

As anticipated, continued upside made contact with the lower limit of stacked supply between ¥110.99-110.80 and ¥110.73-110.58 on Tuesday.

While a rejection from the aforesaid supply may direct price towards stacked demand between ¥109.42-109.68 and ¥109.69-109.89, each noted supply has already been tested and are susceptible to breaking. North of current supply, resistance exists at ¥111.56.

H1 timeframe:

Early London hours on Tuesday manoeuvred price action through resistance at ¥110.38 and crossed paths with 23rd July high at ¥110.59. Interestingly, above this top, Quasimodo resistance resides at ¥110.65, with subsequent buying uncovering ¥111.

Upside momentum, according to the relative strength index (RSI), is slowing, forging early bearish divergence from overbought resistance at 78.38.

Observed levels:

Knowing H4 stacked supply between ¥110.99-110.80 and ¥110.73-110.58 is perhaps fragile, in addition to monthly and daily charts displaying room to discover higher levels, this signals selling interest from H1 Quasimodo resistance at ¥110.65 is thin.

In light of the above, a bullish scenario is in the offing, taking aim at ¥111 and the lower edge of daily resistance at ¥111.20.

August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session, FP Markets

GBP/USD:

Monthly timeframe:

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

Since February, GBP/USD has echoed an indecisive environment south of $1.4377: April high 2018. This follows December’s (2020) trendline resistance breach, taken from the high $2.1161, a descending barrier possibly serving as support if retested.

Month to date, August trades 0.5 percent lower.

Primary trend structure has faced lower since early 2008, unbroken (as of current price) until $1.4377 gives way.

Daily timeframe:

Technical structure largely unchanged from previous analysis

Quasimodo support at $1.3609 welcoming buyers on 21st July not only elevated the currency pair above the 200-day simple moving average at $1.3761, technicians will also note price elbowed under a double-top pattern neckline at $1.3670 (double top formed between 24th Feb high at $1.4241 and June 1st high at $1.4250). Therefore, subsequent recovery gains to highs just ahead of resistance at $1.4003 have likely drawn in sellers in search of better pattern entry levels.

With reference to trend on this chart, the pair has been somewhat rangebound since late February.

Upside momentum, according to the relative strength index (RSI), has diminished since August, shown by way of the indicator dropping through the 50.00 centreline: average losses exceeding average gains.

H4 timeframe:

Despite sterling dropping for a third consecutive session against a modestly stronger US dollar, Fibonacci support between $1.3813 and $1.3852 is unbroken.

Any upside attempts could take aim at 38.2% and 61.8% Fib retracement levels drawn from $1.3983 (this can only be applied once a firm bottom has materialised).

South of $1.3813-1.3852, demand falls in at $1.3687-1.3723.

H1 timeframe:

Demand at $1.3803-1.3827—represents a decision point to push north of $1.38 and take local highs at $1.3833—is within range of entering the fray. Note this area unites with the lower part of H4 support at $1.3813.

Higher up on the curve, Quasimodo resistance can be seen from $1.3882, currently sharing chart space with the 100-period simple moving average.

Regarding the relative strength index (RSI), we’re seeing bullish divergence take shape, though it should be noted that the value has failed to find grip north of the 50.00 centreline in recent moves.

Observed levels:

Support between $1.3813 and $1.3852 on the H4 (green) may still produce bullish interest. An additional area to be mindful of is H1 demand at $1.3803-1.3827, which, as highlighted above, dovetails with the lower edge of H4 support at $1.3813.

August 11th 2021: Speculation of Fed Tapering Fuels USD Bid; DXY Records Third Consecutive Bullish Session, FP Markets

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.




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