Dollar Strength: Time for a Reversal?

The greenback continued its bullish move against the euro and British pound and sent EUR/USD and GBP/USD to fresh lows.

Is it now time for a reversal? Maybe, but this depends on the market’s risk appetite and some technical barriers.

EUR/USD: As anticipated, bearish action gained traction after the price fell below 1.2050 but now the focus turns to 1.2000, a crucial price level which could serve as a firm support. If the euro bounces off that level while bearish momentum fades, we could see a bullish reversal towards 1.21 in a first run. If 1.20 gives way to the bears, a next bearish target should be at 1.1950 and 1.1930. We bear in mind that the pair enters oversold territory increasing the chances for a bullish reversal in the near-term.

GBP/USD: The cable bounced off the 1.3610-support level and seems to be continuing its recent sideways movement. As long as the price holds above 1.3570, chances are in favor of a renewed test of the upper resistance zone around 1.3750. Below 1.3570 we may see a test of the lower support at 1.35.

DAX: After the index took out the 13800-barrier the focus now shifts again to the 14000-resistance. Above 14030 we may see a run for 14350. A current support is however seen at 13300.