Mid-Week Technical Outlook: Dollar Bulls Dominate The Scene

It looks like everyone wants a juicy piece of the world’s most liquid currency. The greenback has appreciated against every single G10 currency since the start of the week.

Dollar bulls were injected with fresh inspiration yesterday thanks to hawkish comments from Federal Reserve Governor Lael Brainard. Appetite towards the greenback was sweetened further by geopolitical risks which sent investors rushing towards safe-haven destinations. With the dollar index (DXY) hitting a fresh 2-year high at 100.50, the path of least resistance certainly points north.

Interestingly, bulls were unable to draw strength from the latest US inflation report which showed prices rising at their fastest pace in more than 40 years. Although CPI jumped 8.5% in March, the core CPI that excludes food and energy prices climbed 6.5%. The weaker than expected core print gave investors hope that inflation could be peaking. Nevertheless, dollar strength is likely to remain an ongoing theme this week.

Looking back at the technical picture, the DXY remains firmly bullish on the daily charts, and as highlighted earlier in the week, a strong close above 100 could open the doors toward 101.00 and 102.25.

There is a similar theme on the equally-weighted USD Index as bulls shift their weight. Prices are approaching the resistance 1.1260. A solid breakout above this point could open the doors towards 1.1350.

EURUSD breaches 1.0850

In our trade of the week, we discussed the possibility of a breakdown happening in the EURUSD. Fast forward to today, prices are trading below the 1.0850 support level. The currency pair remains bearish on the daily charts with the next key levels of interest at 1.0780 and 1.0700. Although the current trend points to further downside, it may be wise to keep a close eye on the European Central Bank announcement on Thursday afternoon.

GBPUSD wobbles above 1.3000

A breakdown could be on the horizon for the GBPUSD. The currency pair is struggling to keep above the 1.3000 support level while the lagging indicators favour bears. There have been consistently lower lows and lower highs while the MACD trades below zero. A strong daily close below 1.3000 could trigger a decline towards 1.2900 and 1.2750, respectively.

Should 1.3000 prove to be reliable support, a rebound back towards 1.3170 could be on the cards.

Is Gold in the process of a breakout?

After being trapped within a range for an extended period, gold could be experiencing a breakout.

Prices are trading above the $1965 resistance as of writing but bulls need a solid daily close above this level encourages further upside. While lagging indicators like the 50, 100, and 200 day-SMA point to higher gold prices, fundamentals could impact the current trajectory. A solid close above $1965 could trigger an incline towards $2000 and $2020. If prices slip back under $1965, the precious metal may test $1940 and $1900, respectively.

USDJPY up up and away…

The USDJPY has jumped to its highest level in two decades. Prices broke through the 2015 high of 125.86 to hit the 126.30 level. Prices are heavily bullish with a daily close above 126.00 potentially opening the doors towards 126.70 and 128.00. Although the trend is bullish, there could be a technical throwback before prices push higher. It may be worth keeping an eye on how prices behave around 125.00.

AUDUSD under pressure…

After failing to close above the 0.7550 resistance last week, the AUDUSD has been under pressure. It looks like the downside is gaining momentum on the weekly charts with 0.7300 acting as a major level of interest.

USD EUR GBP Gold JPY AUD