The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
What moves the market on May 25?
Investors are confused. They weigh the prospect of a soon recovery as economies are reopening against the growing US-China tension. Also, analysts anticipate the whole trading to be discreet with US and British markets closed for public holidays.
The risk-on mood still had a positive impact on stock indexes, such as S&P 500, Nasdaq and Dow Jones. S&P 500 has gained and approached the retracement level at 2975. If it crosses it, it will open doors toward the psychological mark at 3000. Support is at 2895.
Risk-on currencies are under pressure
Whereas, optimism around economic reopening is fading because of the lack of transparency in US-China relationships. Beijing decided to put security laws on Hong Kong, what was viewed negatively by the USA. Investors prefer safe-haven currencies to risk-on ones. AUD, NZD and GBP are moving down under pressure. Let’s look more closely at AUD/USD. It had been a strong upward trend since March 20. Nevertheless, the price has started falling on May 21. It’s may be just a correction. After the pullback to the support line at 0.649, it can move up again. Retracement is at 0.66. Support levels are at 0.649, 0.64 and 0.627.
USD vs JPY
The Japan’s government is expected to lift the state of emergency in Tokyo and its surrounding regions. The US dollar remains the most preferable currency among other safe-haven ones. It has even unbeaten the Japanese yen. USD/JPY has almost broken through the retracement level at 107.725. The next one is at 107.9. Support lines are at 107.35 and 107.1.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
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This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.