Home > Market Recap: EUR/USD Comfortably Above 1.20 as the US Dollar’s Decline Continues

Market Recap: EUR/USD Comfortably Above 1.20 as the US Dollar’s Decline Continues

The US dollar remains offered across the board with no important economic events in sight, but the Bank of Canada and European Central Bank deliver their statements later in the trading week

Monday ended with the US dollar taking another leg lower, despite rising in early Asian trading. Traders quickly reversed course once the London session started, and thereafter, the dollar’s slide continued unabated.

EUR/USD broke above 1.20, which is likely to force the ECB’s hand and keep pressuring the highs until Thursday’s meeting. AUD/USD is back to 0.78, and USD/JPY fell to 108.

The equity markets remain strong as the Dow Jones holds above the 34,000 level, and the Nasdaq — though still close to all-time highs — corrected on the back of lower cryptocurrency prices.

Gold looks interesting as it remains in a rising channel after bouncing on US dollar weakness from a double-bottom formation.

Daily Analysis

The day ahead is light on economic events. The Claimant Count Change and the Unemployment Rate in the UK will create some volatility on the British pound pairs, but the day is likely to experience similar conditions to yesterday.

Volatility is likely to go through the roof from tomorrow as more data comes out, especially from the European Central Bank press conference. Speaking of the ECB, the weekly PEPP purchases once again disappointed, so the institution’s credibility crisis continues.

Source: forexfactory.com
Source: forexfactory.com

Markets to Watch

The Gold, USD/CAD, and AUD/USD markets are in focus today.

Gold

The yellow metal rose over a hundred dollars from its lows and looks strong while in a rising channel. The dollar’s bearishness and the rout in the cryptocurrency market have pushed the price of gold higher. As long as it remains in a bullish channel, gold should find support on every dip, the next important level being at the lower edge of the rising channel.

USD/CAD

The USD/CAD pair prepares for the Bank of Canada’s decision due tomorrow. This was one of the weakest currency pairs during the COVID-19 pandemic, as the Canadian dollar followed the rise in the price of oil and thus weighed on the US dollar. An inverse head and shoulders pattern has formed for more than a month now, with the price currently at dynamic support one day ahead of the central bank’s monetary policy decision.

AUD/USD

The AUD/USD pair displays the opposite pattern. This time, a head and shoulders pattern started at the end of the last year, and the market has only consolidated ever since. Except for the price action during the head’s formation, the AUD/USD pair took its time to consolidate and now tests horizontal resistance.

Winners and Losers

The US dollar continues its slide across the FX dashboard, while the euro is well bid ahead of the ECB meeting.

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