Welcome to thrill-seekers. Between the central bank meetings and the political turmoil in Europe, currency traders have reason to speculate on the future of both the dollar and the euro. Come on, let’s jump in the deep end.
The euro is tossed between political risk in Europe and more particularly in France and the prospect of a first rate cut in the United States by the end of the year. The drop is also most pronounced against the pound sterling and the Nordic currencies (NOK and SEK). As for the EURUSD, after exiting from the bottom of its ongoing upward channel since April, breaking since 1.0790, the currency enjoyed a strong rebound during the publication of the American CPI. However, no significant resistance has been overcome on the upside. We will monitor a first technical threshold at 1.0840 for a continuation of the decline towards the last low points at 1.0600. At the same time, the dollar index (DXY) is holding firm above 103.90, the only break of which would send the currency into a bearish dynamic.
As for commodity currencies, one everywhere, ball in the center could well sum up the current situation. The Aussie hit resistance at 1.6700 after bouncing off the bottom of its horizontal channel at 0.6578. We will always monitor the overflow of one or the other of these terminals to restart the dynamic. The kiwi also held well in its support zone at 0.6110/00 and is once again testing its intermediate resistance at 0.6200/20, a level to exceed to allow a continuation of the current upward dynamic. Small aside: the Canadian dollar is starting to feel the effects of the drop in rates, particularly against the Aussie and the Kiwi. Thus, the AUDCAD remains well oriented above 0.9048 with a target around 0.9500 while the NZDCAD is now moving above 0.84, resistance which has been in place since the summer of 2023.
