Mid-week market forecast: Dollar plunges across the board

Tigerwit Africa

en English

Mid-week market forecast: Dollar plunges across the board

Share on facebook
Share on whatsapp
Share on twitter
Share on linkedin
Share on skype

It’s the mid-week and the dollar is bleeding against its major peers. The dollar index is down below 90. The downside remains more attractive ahead of the US core-CPI data.

The greenback couldn’t sustain last week’s surge that took the DXY to 90.7. It only gained a significant 1.65% – highest since the late October minor recovery. The long-term bearish trend is still very much intact. The recent dip came along with the overnight drop in the US 10-Year bond yield. Investor’s confidence remains high despite the fears of another global lockdown as vaccine producers have not been able to meet up with demand. Thus, the bid for traditional safe-havens continues to collapse.

What’s the next target for Dollar bears?

In the last technical forecast, we had anticipated the lack of strength of the last week’s bounce below 91.

The wave 4 surge as we mentioned in the last update, ended at 90.77 – below the 91 psychological level. The index broke below the wave 4 rising channel thereby opening the way for a potential decline below the 89.15 bottom. We can anticipate a gradual impulse wave decline from here if the next intraday bullish correction remains below 90.75. The bears can eye targets at 89.15 and 88.15 in the coming days or weeks.

Can EURUSD bulls glide toward 1.25?

The EURUSD maintains a near-perfect inverse flow against the dollar index. With the DXY anticipation above, we will most likely see the euro-dollar surge further. From 1.1605, we could see an advancing impulse wave pattern of the minor degree (number in black). The intraday sub-wave wave iii (circled in red) of 5 ended at 1.2343 after the price broke significantly below its channel. The current dip is wave iv of this degree. However, there must be a confirmation that the minute wave iv (circled in red) has ended at 1.2135 (nearly 38.2% Fibonacci retracement level at 1.2116). The resultant bullish reaction is not yet strong enough. A gradual rise is expected to follow above the 1.2343 high and toward 1.245 and 1.2566 critical targets.

GBPUSD bullish run resisted at 1.37 

The Pound Sterling resumed the bullish trend on Tuesday across the board. GBPUSD was one of the highest gainers as the dollar weakness added to gains on this currency pair. The corrective wave X ended at 1.345 – some pips short of the 1.3429 support level. This rally should eventually break above the 1.37 resistance level. Meanwhile, the current dip could oscillate between the 1.37 resistance level and 1.3635-1.3623 support zone before the bullish trend shoots higher. if 1.37 is taken out, the next target would be 1.375 where the impulse wave rally from 1.345 could end.

Will AUDUSD touch 0.79?

As a risk-on currency, the Aussie and Kiwi are among the biggest gainers since March 2020. As risk-driven currencies, AUD, NZD and CAD will continue to benefit from risk appetite and a dollar slump. AUDUSD, as the chart above shows, should climb higher to complete the 5th sub-wave of minor wave 5 (in black). Fibonacci projections suggest a technical bullish target close to 0.79. A similar structure can be seen on NZDUSD and the inverse on USDCAD.

Save-haven dollar and yen could drag USDJPY long in the pit

mid-week-market-forecast

After completing a very strong bullish technical structure, the dollar-yen surged quickly to 104.4. However, the current dollar weakness has dragged the pair to shed nearly half of this profit. From the technical perspective, we could expect at least a 3-wave bounce toward 105-105.5 in the medium-term. The first leg ended at 104.4 and now the second leg – wave B, is in motion. A deeper wave B is expected to 103.26 or slightly below before another massive surge to 105-105.5 target zone. However, because of the safe-haven nature of the dollar and yen, wave B correction might take much more time than A.

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.

Sign up for our Newsletter