fxs_header_sponsor_anchor

Analysis

Dollar stabilizes… but for how long?

The battered Dollar stabilised against its peers on Wednesday as investors pondered the possibility of a US Government shutdown on Friday.

Heightened political uncertainty in Washington is likely to weigh heavily on the Dollar and may fuel the downside. Itis interesting that the Dollar remains at such depressed levels despite expectations of a US rate hike in March. Dollar bulls are clearly struggling to find fresh inspiration from Fed hike expectations, and this is reflected in the currency’s bearish price action. Appetite for the Dollar is at risk of diminishing even further if major central banks join the Federal Reserve and gradually tighten monetary policy.

From a technical standpoint, the Dollar Index still remains under pressure on the daily charts. A technical bounce could be in process, and might push prices intothe 91.40 region. Alternatively, an intraday breakdown below the 90.34 daily low could invite a further decline towards 90.00.

Currency spotlight – GBPUSD

Sterling has jumped to its highest level since the June 2016 Referendum vote, thanks to ongoing Dollar weakness and market optimism over a soft Brexit.

While the Pound could venture higher in the near term, it must be kept in mind that the currency still remains highly sensitive to political and Brexit developments. Taking a look at the technical picture, the GBPUSD is incredibly bullish on the daily charts. Prices are trading above the 50 SMA while the MACD has crossed to the upside. A decisive breakout above 1.3850 could invite an appreciation higher towards 1.3920 and 1.4000, respectively. Alternatively, a failure for prices to close above 1.3850 may open a path back to 1.3700.

Commodity spotlight – Gold

Gold bulls displayed early signs of exhaustion on Wednesday after struggling to maintain control above $1340. Prices are currently trading around $1335.50 and could edge lower later in the day amid a stabilising Dollar.

From a technical standpoint, Gold still fulfills the prerequisites of a bullish trend based on the consistently higher highs and higher lows.  A technical correction seems to be in process, with the next level of interest at $1325. If bulls are able to re-awaken before the $1325 level, the price could re-test $1340 and $1360, respectively.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.