The dollar cut back losses during Wednesday’s Asian session as the index retraced to 93. Ahead of the London open, the Sterling and Yen joined the greenback on the gainers list while Swissy falls further as CAD and Aussie retreat slightly. What’s coming ahead?
There is little to talk about on the economic calendar on Wednesday. As such, risk sentiment is expected to drive the currency market and the sentiment currency pairs are expected to remain the better and worse performers. However, volatility might slow down as the market set eyes on the Jackson Hole symposium starting on Thursday.
Ahead of the event, the risk sentiment is tilting more in favor of the riskier FX. The dollar has thus been at the losing end as the market began to perceive some dovish outlook from the Fed Chair later in the week at the symposium. Earlier in the month, investors largely expected tapering at some point this year although much of that has been priced in by the market in the first three weeks. However, with the delta variant and a rumored more disturbing variant of the virus pushing for a 4th wave of the outbreak, the Fed might return to its cautionary self and extend the timeline for tapering. This possibility encourages investors to buy into risk assets and dump the safe havens. Thus, equities are favored while the dollar bends.
Dollar pares losses at 93
Between Friday and Tuesday, the dollar index shed over 0.9% as it dived to 92.8 before the current rebound. The current retracement is expected to go higher but slower than the bearish run. Traders should watch for the 50-61.8% retracement today up to 93.25-93.4 where the rally could end and the bears will make fresh attempts to push down to the 94.7 key support.
EURUSD could decline toward 1.17
In contrast to the dollar, EURUSD rejected further push above 1.175 intraday psychological resistance. A corrective decline toward 1.17 key psychological support is high on the cards, especially if the dollar pushes up as expected. The Euro seems to have entered another round of non-action. With no EUR fundamental event this week, the dollar remains the driver of this forex pair. However, a break above 1.175 during the London session would mean that the expected correction has not yet started and we would see the next intraday top at 1.178.
Gold bull resisted at 1800
After crashing to 1680, Gold has recovered incredibly in the last two weeks, gaining over 7%. However, after the breakout on Monday to 1810, the price is back below the 1800 key level. The dollar-denominated commodity will most likely shed more if the resistance zone holds firm. A dip toward 1750 should follow if the price breaks below the rising trendline down to 1780. On the other hand, a renewed surge above 1800 and out of the highlighted resistance zone will shoot the metal above 1850.
Disclaimer: This communication is for informational purposes only and should not be viewed as any form of recommendation as to a particular course of action or as investment advice. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. This communication has been prepared based upon information, including market prices, data, and other information, believed to be reliable; however, TigerWit does not warrant its completeness or accuracy. Trading CFDs involve risk and can result in loss of capital.