Early on, it looked as though we were going to get a clean read on the dollar today. The RBA hiked but the AUD sank; EUR/USD had broken key 1.4685 support…then, out of nowhere, gold goes to the moon.
The sudden $20 rally to new highs added an interesting new wrinkle to the equation. The buck and gold have been strengthening together for the last few days, so the greenback can sustain a bit of strength with gold underpinned, but a move to record highs certainly clouds the picture.
Traders will want to shoot themselves if gold continues to rally and the buck resumes its slide and they miss the opportunity, because EUR/USD looks like such a dog at the moment. By the same token, they will kick themselves if they cover EUR/USD shorts because of the gold rally, only to see the slide in the single currency resume.
My rule of thumb is that when the fundamentals and the technicals are in opposition, stick with the techs. A close below the 1.4685 level today will keep EUR/USD under pressure in the near-term.
EUR/USD is testing offers in the 1.4695 region once again. Fresh selling is seen toward 1.4720/30.
