The dollar is now down to the lows for the day as we see the technical correction run deeper ahead of the weekend break. Fed chair Powell didn't really give a different message to Jackson Hole yesterday while the ECB delivered on expectations and kept the door open for another 75 bps rate hike in October.
The latter is keeping European bond yields perky while some added jawboning from Japanese officials also contributed to a drop in USD/JPY but this to me just seems like the dollar rally has run out of steam upon testing key technical levels - more than any of the developments above.
The greenback is now down 1% against the euro and pound, so let's take a look at the charts to gauge the situation.
EUR/USD is threatening a push above its recent swing highs of 1.0075-90 as the high for the day clips 1.0101. A break above that will see the near-term bullish momentum extend with buyers potentially enjoying a reprieve towards 1.0200 and perhaps the 100-day moving average at 1.0344 currently:
The rebound comes after the failure to hold a firm daily break below the 0.9900 region even though sellers were keeping interested below parity. I still maintain that shorts are still preferred when viewing the pair but I wouldn't rule out a further correction in the meantime, especially with the US CPI data also in focus next week.
Meanwhile, GBP/USD is seeing a strong bounce on the weekly chart as it trades to the highs for week now upon testing the March 2020 lows near 1.1400:
That could mark a sign of a technical bottom and with the near-term chart also turning around to see a more bullish momentum on a break above its 100 and 200-hour moving averages:
There is scope for the rebound in the pound to extend towards 1.1800 potentially next.
All of this comes as USD/JPY is also on the retreat after failing to breach 145.00 and the added jawboning from Japanese authorities have helped to see a significant decline back below key near-term levels as outlined here.
