The Dollar has entered the week on the wrong side of the bed, struggling to nurse the nasty hangover from last Friday’s selloff!
After securing a weekly close below the 92.00 level, the Dollar Index (DXY) is under intense selling pressure - falling to levels not seen in two and a half years. Given how optimism surrounding the vaccine developments and encouraging data from China is likely to fuel the risk-on mood, the Dollar is positioned to extend losses in the week ahead.
Looking at the technicals, prices are trading below the 20 & 100 Simple Moving Average (SMA) while the MACD trades to the downside. Sustained weakness below 92.00 may open the doors towards 90.00. If bulls are able to push prices back above the 92.00 support, the DXY could retest 92.70.
GBPUSD bounces within range
Over the past seven days, the GBPUSD has found comfort within a 100 pip range with support at 1.3300 and resistance at 1.3400.
One can’t help but feel that the currency pair could be waiting for a fresh directional catalyst to break up or down… As the clock ticks down to the official Brexit transition deadline on 31st December, volatility will most likely be on the cards.
Focusing on the technicals, a solid breakout above 1.3400 could open the doors towards 1.3482 and 1.3520 respectively.
A solid move beyond the 1.3500 resistance may open the doors towards 1.4300.
Ultimately, where the Pound concludes by the end of 2020 will be heavily influenced by whether the UK and EU are able to secure a post-Brexit deal.
Euro knocks on 1.20’s door
The Euro rallied significantly on Monday, trading closer to the psychological 1.2000 level.
This remains a major barrier that may take the combination of fundamentals and technicals to overcome.
A solid breakout and daily close above 1.2000 could signal a move higher towards levels not seen since April 2018 above 1.2150.
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