Mar 25, 2020 7:30 PM +00:00 James Stanley, Strategist US Dollar, EUR/USD, GBP/USD, AUD/USD Price Analysis The US Dollar gained 8.8% in a ten-day span as risk aversion enveloped global markets. EUR/USD broke down to a fresh two-year-low, but AUD/USD set a fresh 17-year-low and GBP/USD put in a 35-year-low. The US Dollar shied away from a big zone of resistance at 103.00 on DXY last week, and has since put in a 23.6% pullback. But – is the bullish trend yet over? Or is the USD just reloading for a run towards 19-year-highs? US Dollar Shows Extreme Volatility as Risk Aversion Envelops Global Markets We’re now in the stretch run for the end of March and it’s been a brutal month across global markets. While stocks have been hammered the world-around, there’s been some massive moves under the surface as well, with Treasuries going on a wild ride and the chart of ‘TLT,’ representing US debt with 20+ years of maturity, taking on a tone more like a cryptocurrency rather than that of the stalwart in sovereign debt that it’s always been. This entrance of extreme volatility has shown through currency markets, as well, with the US Dollar catching an aggressive bid a couple of weeks ago that pushed DXY from a fresh yearly low up to a brand new three-year-high. This type of move or reversal would normally take months: But in this case, it took about ten days, two of which when markets were closed for the weekend. Last Thursday saw the Greenback climb-up to that fresh three-year-high and since then a pullback has started to show, with buyers stopping just short of the 103.00 figure that turned around the advance in early-2017. So far, that pullback has been restrained by the 23.6% Fibonacci retracement of the recent bullish move. Chart prepared by James Stanley; USD on Tradingview
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The US Dollar is holding resistance at a confluent area on the chart, as both the 14.4% retracement of the recent breakout move syncs with the 38.2% retracement of a much longer-term move, taking the high from the year of 2011 and drawn down to the low of the Financial Collapse in March of 2008. Also of note on the resistance side and a price that hasn’t yet come into play is the 103.00 area on DXY, and the current three-year-high at 102.99 shows that buyers had previously shied away from a re-test of this key zone. That area around the 103 level is what helped to turn around a bullish advance after the US Presidential election in 2016; with December of 2016 and January of 2017 showing four consecutive weeks of resistance before sellers finally able to take-control. ---The US Dollar put in a huge breakout over a ten-day-span. DXY has since found resistance and posed a 23.6% pullback, but are buyers reloading for more gains? --- ...
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