Could The U.S. Dollar Rebound Prove Short-lived?

The U.S. dollar extended its gains versus other major peers Thursday after the Federal Reserve marked a turning point in the communication to the market from ultra-dovish to a hawkish tilt. However, while a Fed rate hike is still a long way off, the rebound in the dollar could be limited in the short-term.

EUR/USD: The euro dipped slightly below 1.19 but was able to hold above that threshold until at least Friday morning. We see a short-term resistance now at 1.1950 followed by a crucial resistance at 1.20 – which served as a former crucial support in this pair. Falling below 1.1860 however, bears may push the euro lower towards 1.18.

GBP/USD: The cable tested a lower target at 1.39 from where it stabilized. Below 1.3890, a next bearish target could be 1.3860 followed by 1.38. Given that the pair is in oversold territory, a pullback becomes more likely now with short-term resistances seen at 1.40 and 1.4050.

DAX: The index traded recently sideways and made it difficult for traders to benefit from small sideways swings. We nee to see a break above 15810 in order to shift the focus towards a higher target at 15880. A support area is however seen between 15590 and 15530.

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