US Dollar Weakness Remains A Persistent Theme

• 29 Jan 2018

USD/CHF

The USD/CHF pair appears to be recovering from an extended bearish move since mid-December.  An inverted hammer candlestick at the bottom of the downtrend for the pair is a strong signal for a bullish reversal. The pair has broken the lower Bollinger band to the upside and RSI is close to breaking the 30 support level to the upside. Fundamental factors later in the day will likely impact near-term momentum for the pair.

Impact event: Core Personal Consumption Expenditure data will be released 15:30 GMT+2 and will impact USD pairs.

USD/JPY

The USD/JPY pair is testing the 108.89 price level to the upside, after a period of significant weakness in the U.S. dollar. RSI supports a bullish reversal and is testing the 30 support level whilst volume is starting to climb, indicating a rise in buying volume. If the pair is not able to break the 108.89 price level, then price action is likely to reflect a longer-term downtrend which started at the beginning of January.

GBP/USD

The GBP/USD pair has hit new highs breaking the 1.41 price level, off the back of a weaker U.S. dollar and a breakthrough in Brexit negotiations. Selling pressure has noticeably started to rise however, and this rise has been coupled with a downward trajectory on RSI. Buying volume also appears to be decreasing as the pair has broken the upper Bollinger band to the downside. Fundamental factors may play a role later in today’s trading and may or may not provide weight to a potential reversal.

AUD/USD

The AUD/USD pair has tested the upper Bollinger band consecutively in the last three trading sessions. RSI is also in overbought territory indicating that the bullish run may be losing steam. MACD has flattened in strongly bullish territory, and today’s candle indicates that momentum is with sellers. However, given U.S. Dollar weakness and strengthen global economic growth, the AUD may be able to hold on to its bullish appreciation over its North American counterpart.