The US dollar has been unstoppable lately, and it hit a new 19-year high today.
As seen in the Q2 forecast, the US Dollar’s strength has already been present for some time. The prospect of a stronger dollar was teased in Q1 of 2021, but it quieted down in Q2 before resurfacing in Q3.
The FED’s ramping up of Quantitative Easing has resulted in a slow and steady decline in the dollar. Since then, it’s kept on growing as more powerful and more robust inflation pushes the FED further away from easy money policies that got us into this mess.
Despite this strength entering Q2, the USD has only grown more robust, and April thus far has seen the most significant monthly increase in the Greenback since October 2008.
USD shorter-term
In the short term, the US dollar’s rise has been robust and consistent, with just a few minor setbacks. Given the circumstances, with values only recently reaching a fresh 19-year high due to a negative GDP report being released, there may be room for pullbacks.
However, given how favourable the backdrop is, any pullbacks are likely to be minor since there have been a lot of buyers on the sidelines waiting to get long, as shown by the fact that price action has only continued to expand throughout this bullish advance.
There was resistance at 103.50 and 103 that has the potential to hold if prices fall further.
EUR/USD
The significant change was the pair’s passage through the psychological level of 1.0500 throughout a single night. It is another indication that the pair has entered yet another bear market.
GBP/USD
Last week, cable was in a hard promotion mode, and it was only last Thursday that the descending triangle gave way to a bearish breakdown at the 1.3000 level. Yesterday saw the pair push down to the 1.2500 level, and overnight, even that was broken through.
Since the UK decided to leave the EU, April has consistently proven one of the worst months for GBP/USD. There is no nearby support that will come in to soothe today’s sell-off, unlike EUR/USD above.
USD/JPY throttles higher
When I looked into USD the week before, USD/JPY appeared to have some potential for a pullback. Last evening, the Euro experienced a significant drop in value, reaching its all-time low against the Japanese Yen. As I write this, it has since been incorrect; the Yen received another significant boost overnight, and this move was even more dramatic than that of the Euro or British Pound, as indicated by the gains in EUR/JPY.
Previously, the 130.00 mark was regarded as crucial. As the price has catapulted past the 130 barriers and briefly touched 131, that seems to be less so.
The USD/JPY pair has continued to rise, extending its previous 20-year high by another day.
AUD/USD dropping to the significant fig
This month’s move in the AUD/USD pair has been notable on the front of reversals. The pair was previously robust as it came into the April trade, reaching a fresh nine-month high in the opening days of the month. Following a significant reversal on April 5th, sellers have taken control, and prices are quickly approaching the 0.7000 psychological barriers.
You can see AUD/USD working on a bearish engulfing candlestick that indicates a potential break of the 0.7000 central figure from the still-unfinished monthly chart.
Conclusion
In conclusion, the four currencies we looked at today show different short-term price action setups. The EUR/USD and GBP/USD are in a holding pattern after strong rallies, while the USD/JPY is pushing higher on continued momentum. Finally, the AUD/USD is dropping towards significant support levels. As always, it’s crucial to stay up to date with market movements and be ready to take advantage of trading opportunities when they arise.
