After the drop yesterday, let’s take stock of the technical situation in the dollar and how that will set things up ahead of the US jobs report later today.
The greenback might be little changed mostly, with the antipodeans being the only notable movers in the major currencies space, but there are some interesting technical developments to be wary of. Let’s get into it.
EUR/USD hourly chart
The first one is the notable turnaround in EUR/USD as buyers now seize back near-term control of the pair.
Price action had struggled over the last three weeks to get above its 100-hour moving average (red line) mostly. And then, in one swift jump higher yesterday, we saw buyers completely switch the picture from bearing more bearish to now being more bullish in the near-term i.e. price moving back above both the 100 and 200-hour (blue line) moving averages.
That sets up a defense on the part of sellers closer to offers at 1.0800 as well as the 100-day moving average at 1.0812 next potentially.
USD/CAD daily chart
At the same time yesterday, we saw USD/CAD crumble as the upside momentum gives way. The break of the trendline resistance last week was encouraging but buyers were unable to get past the end April highs in the end.
That led to a turnaround in fortunes and now the break back below the key trendline resistance, as well as the confluence of the 100 (red line) and 200-day (blue line) moving averages, puts sellers back in control.
A test of key trendline support, seen at around 1.3330 currently, may be beckoning for the pair especially if we do see a downbeat US jobs report later today.
AUD/USD hourly
Next up, we have the antipodeans and the first being AUD/USD. The pair is reflecting a similar vibe to EUR/USD as per the above, with price action having struggled to hold any push above the 100-hour moving average (red line) in recent weeks. Sellers held their ground to keep the downside momentum going but a daily defense at 0.6500 this week is turning things around now.
The pair is up over 100 pips from the key support level and a break back above the 200-hour moving average (blue line) as well sees buyers back in near-term control.
If the run lower in the dollar continues, we could be due a stronger pullback towards 0.6638 (50.0 Fib retracement of swing lower in May) and then 0.6680 (61.8 Fib retracement) next at least.
NZD/USD hourly chart
And then we have NZD/USD which also saw a downside push towards key support 0.6000 this week. The level held on the daily chart and amid the dollar turnaround yesterday, that was enough for buyers to seize back near-term control as well.
For now, buyers are staying in control – albeit marginally – but in the event that the dollar stumbles further later today, we could be seeing a push back towards the 200-day moving average at 0.6148 potentially.
So, what’s the takeaway from all this?
It is evident that yesterday’s drop in the dollar was rather significant and from a technical perspective, you can see how dollar bulls have lost their poise and composure from recent weeks.
In fact, they have mostly lost near-term control when you drill down into the hourly charts and when you get a consistent read across multiple pairs, that’s often a signal for a potential pullback/reversal.
The US jobs report today is going to be crucial to see if dollar bulls can hang in there. Otherwise, the near-term momentum suggests that poor data for the dollar could see a heavy round of selling before the weekend.