Markets on Thursday: Strong USD Puts EUR and GBP Under Pressure
Rowan Crosby • 2 min read
The USD was able to stage another day of buying which put many of the majors under more pressure. The big movers on the day were the EUR/USD and GBP/USD, who fell away sharply.
We can often see month end movements which are a little out of context. In truth, this was in keeping with many of the recent technical moves. The selling started on Tuesday when we heard from new Federal Reserve Chairman Jerome Powell when he took a hawkish tone while making his maiden speech to Congress. He’s back for more on Thursday, although I wouldn’t expect the same level of action in the Greenback.
At the same time, US stocks weakened. After a strong run, we’ve now had two days of selling which could mark a bit of a turning point.
Crude Oil also fell away sharply after a larger than anticipated build in inventories. I spoke yesterday about the potential for some selling pressure and sure enough, that’s what we saw.
The USD Takes Out Resistance
Resistance at 90.50 on the DXY has been my radar for the last few sessions. Finally, on Wednesday it appears that we have taken it out. The dollar has been driving higher against the majors and if we can hold then I suspect we have some more short-term downside ahead.
Certainly, the GBP/USD is headed lower along with the commodity currencies.
91.00 is really the last barrier standing in the dollar’s way. Once we push through that there is a significant amount of upside potential ahead. That means the majors like the AUD/USD and NZD/USD have got a fair bit of room to fall.
I’m bullish on the USD for the time being. We are now in March and that should mean an interest rate rise in the US. So strap yourselves in for a big month ahead.
US Dollar Index (DXY)- 240 min Chart.