Currencies: The dollar benefits from escalation in the Middle East

Currencies: The dollar benefits from escalation in the Middle East
Currencies: The dollar benefits from escalation in the Middle East

The expansion of the Israeli-Palestinian conflict in Lebanon and Iran combined with good American unemployment figures has pushed currency traders to reposition themselves on the dollar. To the point of significantly degrading certain technical configurations. Detailed review of the forces present.

After once again hitting the upper limit of its consolidation channel at 1.1202, the EURUSD hit its lower limit at 1.0980 thanks to employment figures that were well above expectations. The break of this key technical threshold undermines the bullish dynamic and validates a classic reversal pattern in the form of a double top whose theoretical potential stands at 1.0815. The proximity of intermediate support at 1.0958/37 could however provoke some bullish reactions initially. Note that the level of invalidation of the bearish pattern is located at 1.0980. At the same time, we will monitor support at 1.3060/20 on the GBPUSD.

USDJPY rallied to 147.16 and is currently testing August rebound highs at 149.40. An intermediate break is expected towards 145.07 before considering a continuation of the rise towards 151.48/152.10. Note also that the USDCHF has exceeded the upper limit of its horizontal consolidation channel at 0.8540/70 which authorizes 0.8790.

Finally, in terms of currencies linked to commodities, the Aussie consolidates after having “overshot” 0.6900. It is currently testing a support zone at 0.6800/6795, a threshold which must hold to limit the current decline and consider a resumption of progress towards 0.7110/60. Conversely, the clear break of the support should send the currency towards 0.6650. The Kiwi formed an encompassing bearish weekly data reversing the previous two weeks of gains. The potential of the figure comes out at 0.5920 for an invalidation at 0.6261.

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