dollar retreat – MaiMarFX

The U.S. dollar retreated in the last week, pushing the euro and British pound higher into overbought territory as a result. This week, traders will watch the FOMC minutes (Wednesday) and the Federal Reserve’s preferred gauge of inflation, the PCE index (Friday). These reports may revive some strength in the greenback but we bear in mind that the market’s greatest concern is a U.S. recession with markets pricing out some Fed tightening in 2023.

GBP/USD – Should bulls dream of 1.30?

Positive U.K. data and a weakening dollar have helped to push the cable higher but the zone between 1.26 and 1.2650 (green ellipse) could come in as a crucial resistance. Moreover, the pair entered overbought territory, making corrections toward 1.24 more likely now. However, should bulls make their way up to 1.26 and even be able to push the cable above 1.2650, then there is little in the way of resistance before 1.30 comes into play. On the downside, we expect the 1.24-area to serve as a support.

EUR/USD – Nothing new between 1.0650 and 1.0450

Euro bulls aim to break above 1.06 despite the current overbought situation. If 1.0610 finally breaks to the upside, gains might be extended toward 1.0640-50 but it’s only a question of time when the euro will have to correct some of its gains. A current support-area is seen between 1.05-1.0450.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

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The U.S. dollar has lost ground against other counterparts and some traders already speak of a shift in sentiment from bullish USD to bearish USD. There were no fundamental news headlines supporting the greenback’s pullback but the reason could have been a kind of ‘saturation point’ for dollar bulls after strong gains. In other words, the dollar’s retreat should be taken with a grain of salt, at least as long as important technical barriers (EUR/USD 1.0650, GBP/USD 1.2650) remain unbroken to the upside.

EUR/USD: Consolidation between 1.0650 and 1.0450?

The euro appreciated and traded above 1.05. We will now pay attention to price breakouts either above 1.0660 or below 1.0440.

The best performer yesterday was the British pound which strongly rose against the dollar, testing the 1.25-level. Gains could be even extended towards 1.26 and 1.2650 but below 1.24, we favor a bearish continuation.