The dollar index (KTM symbol: USDX) may be running into an area of support defined by the following:
In general, during the dollar uptrend movement, G10 currencies tend to edge lower, like EUR, GBP and CHF. And MXN, and CNH in EM FX. Besides, We are not expecting a bearish trend on AUD, CAD, and NZD due to growth-related factors and central banks’ hawkish tone.
Bank of Canada review:
In its April policy meeting, the Bank of Canada holds its current deposit rate at 0.25%. The outcome is widely expected, but the tone is hawkish, which sent the loonie higher across the G10 currencies on Wednesday.
Taper ON: Policymakers confirmed that “Effective the week of April 26, weekly net purchases of Government of Canada bonds will be adjusted to a target of $3 billion”. This move would pressure the Fed to act sooner. Based on this fact, we expect CAD would outperform against the dollar over the near-medium term. However, longer-term USDCAD should shoot upward.
On the weekly chart, the cross produces a death cross. As of now today, the price action has been capped at 1.2660 with supports located at 1.2460 followed by 1.2360.
GBPUSD: On Tuesday, the cable was rejected at the parallel resistance level of 1.4020 and continue to decelerate for the third straight session. Immediate support levels are located at 1.3800, 1.3720 its 100MA, and 1.3670. A decisive breakout down the double bottom level placed at 1.3660 means we will print the second lower wave at around 1.3500 its 200MAs. The daily and the weekly RSI have been edging lower. If the price continues to move higher, watch out for possible monthly resistances level between 1.4240-1.4375.
Since September 2020, 100MA has been the lifesaver for the cable. A truncated 100MA, means that’s the end of the bullish story.
Read our EURUSD and EURGBP forecast in the Key To Markets Blog
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