Technical Analysis

Dollar technicals continue to shine with month-end, quarter-end in focus

It is tough to argue with the charts right now

As much as the dollar gains since yesterday may be in part to do with month-end and quarter-end flows, the charts are making it tough to really dismiss the significance of the moves as September looks to draw to a close.

In the case of EUR/USD, price is making fresh lows since July now in a push to 1.1570 and contesting its 200-week moving average @ 1.1572 as outlined here.

There’s little else in the way of a push towards 1.1500 with the 50.0 retracement level of the swing move higher from March last year to January this year only seen @ 1.1493.

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Meanwhile, USD/JPY is also on the brink of an extended breakout amid the ongoing selloff in Treasuries over the past week, with price now climbing to test 112.00.

USD/JPY D1 30-09

The focus on the energy crisis going into winter is giving rise to inflation worries and that is also arguably translating to exacerbated movement in the bond market.

The weekly chart for USD/JPY underscores the importance of the 112.00 level and a firm break there paves the way for a push to 114.00 next, which should bolster dollar pairs even more alongside a downside break in EUR/USD.

USD/JPY W1 30-09

Adding to that is the technical breakdown in GBP/USD from last week below 1.3600.

GBP/USD D1 30-09

The pair has dribbled to fresh lows since December last year earlier today but have recovered a little to 1.3440 levels currently. However, the mild bounce today is still rather insignificant when put into context of the recent downside momentum – which could continue through to 1.3200 as the dollar remains somewhat supportive at the moment.

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