Dollar keeps firmer ahead of European trading

Technical Analysis

Author: Justin Low | usd

The greenback is maintaining its advance, particularly against commodity currencies so far today

The dollar is keeping firmer ahead of European morning trade, as we see risk sentiment turn a little softer with US futures seen down by ~0.6% currently.

That is weighing a little on commodity currencies, particularly the aussie and kiwi as they trade closer to session lows now and are down by ~0.5% against the dollar.

Looking at the charts:

EUR/USD D1 24-09
EUR/USD is keeping below the 1.1700 handle and that is the key line in the sand for the pair as sellers look to build further downside momentum towards the end of the week.

There is little support before we get to the 50.0 retracement level @ 1.1590 but sellers could potentially be eyeing a move towards 1.1500 next should we see the dollar continue to benefit from the ongoing risk slide as seen yesterday.

GBP/USD D1 24-09
Cable is also in a precarious spot as price action is starting to threaten a firm break below its key daily moving averages and the 61.8 retracement level @ 1.2722.

Buyers are still trying to hang on to the key levels above but as the dollar continues to make its case for a push higher and the pound facing persistent headwinds over the past week, a firm break today could lead cable to dribble lower towards 1.2500 next.

AUD/USD D1 24-09
Amid the turn in the risk mood, the aussie is also failing to hold its ground as we see AUD/USD breach below its August low and testing a break below its 24 July low @ 0.7064.

Odds that the RBA will ease policy further at its October meeting have also increased this week, with aussie cash rate futures implying a ~76% chance of a cut as of today - up from ~63% at the end of last week.

That puts the pressure on AUD/USD aiming towards its 100-day MA (red line) @ 0.7002 next and alongside the 0.7000 level, will be a key spot for buyers to defend.

NZD/USD D1 24-09
Much like the aussie, the kiwi is also weighed down amid the souring risk mood but also as the RBNZ kept a more dovish tone at its policy meeting this week.

The double top pattern in NZD/USD is also an ominous sign as we see price action start to nudge towards its August and mid-July lows, with the 100-day MA (red line) @ 0.6500 also coming into focus now.

A break below that will see sellers extend the downside momentum, with little standing in the way of a push towards 0.6400 and the 200-day MA (blue line) thereafter.

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