Charts Of The Day: Traders in risk-off mode, dollar in demand

Market Analysis / 4 Min Read
Milan Cutkovic / 03 May 2021

HIGHLIGHTS:

  • With traders back in risk-off mode, the Dollar is in demand
  • Heavily oversold in the short-term, USD/CAD could be one to watch
  • GBP/USD takes a tumble after failing again to break through 1.40 resistance
  • USD/JPY is clearing the obstacles
  • USOIL trading in an ascending channel, having recently failed at the upper trendline

EUR/USD

With traders back in risk-off mode, the Dollar is in demand. EUR/USD saw a sharp sell-off on Friday and broke below the rising trendline from the April low. Traders will be keeping a close eye on the support zone between 1.1990 and 1.20 – should this fail to hold, a continuation of the correction towards 1.1925 seems likely.

USD/CAD

If the current Dollar strength turns out to be the start of a larger correction rather than a short-lived bear market rally, USD/CAD could be an interesting currency pair to watch. It is heavily oversold in the short-term, and the Daily chart shows a positive RSI divergence. The odds for USD/CAD to bounce back have improved, and a test of 1.2350/60 resistance could follow soon. However, unless there is a USD bullish reversal, selling interest is likely to reappear there, capping the topside on the initial breakout attempt.

GBP/USD

Similar price action was seen in GBP/USD, which tumbled to almost 1.38 after failing again to break through 1.40 resistance. The 1.38 figure is also the 61.8% Fibo of the April rally, so traders will pay attention to what happens around this level. A clear breakout would pave the way for a deeper correction to at least 1.3680.

USD/JPY

USD/JPY has cleared quite a few obstacles in recent days, with 109.25 resistance (50% Fibo of April decline) the latest one. The Daily RSI is not hinting at overbought conditions yet, so there might be some more room to the upside in the short-term. Key resistance is seen at 110.00 followed by the 78.6% Fibo at 110.20.

Oil Markets

USOIL is trading in an ascending channel, and recently failed at the upper trendline. Immediate support is seen at $62.20, followed by the lower channel trendline. Overall, the uptrend remains intact and Oil bulls have little to fear as long as Oil prices stay above the $57.20 support level, which is still far away from current levels.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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