What’s next for the US Dollar

GBPUSD – technical overview

The market has rebounded sharply, after collapsing to a +30 year low below 1.1500. This supports the longer-term constructive outlook, with a major bottom sought out ahead of the start to a big run to the topside back through 1.3000. Look for the major pair to hold up well into setbacks, and ultimately above 1.2500 on a monthly close basis for confirmation.

• R2 1.3000 – Psychological – Strong
• R1 1.2905 – 28 July high – Medium
• S1 1.2780 – 27 July low – Medium
• S2 1.2644 – 22 July low – Strong

GBPUSD – fundamental overview

The Pound has extended its run against the Buck to its highest levels since March, with the single currency benefiting from broad based US Dollar outflow and a mostly supportive risk backdrop. However, with the major pair now well extended, we suspect sellers will start to emerge, as risk builds for a major correction and Brexit uncertainty continues to be a weighing factor. EU Barnier has remained optimistic about a post Brexit trade deal with the UK. Looking ahead, key standouts on the calendar include UK CBI distributive trades, and US reads in the form of Case Shiller, consumer confidence and the Richmond Fed manufacturing index.

USDJPY – technical overview

We're seeing signs of a pickup in volatility in the major pair, with the market chopping around quite a bit. Still, there is no clear directional insight, with the price confined to a larger triangle formation. Overall, rallies have been well capped above 110.00 and dips well supported below 104.00.

• R2 108.17 – 1 July high – Strong
• R1 107.54 – 20 July high – Medium
• S1 105.12 – 27 July low – Medium
• S2 105.00 – Psychological  – Strong

Japan producer prices were out and came in as expected, with the data doing little to influence price action in the Yen. The US Dollar has been sold across the board, while the risk backdrop has been more shaky, with both of these developments factoring into the Yen's upswing. Looking ahead, key standouts on the calendar include US reads in the form of Case Shiller, consumer confidence and the Richmond Fed manufacturing index.

EURCHF – technical overview

The market remains very well capped into offers and the medium-term picture continues to favour the downside. A weekly close back above 1.1000 would be required to take the immediate pressure off the downside.

• R2 1.0916 – 5 June/2020 high – Strong
• R1 1.0839 – 27 July high – Medium
• S1 1.0600 – Figure – Medium
• S2 1.0577 – 25 May low – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of renewed risk liquidation in 2020, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

Technical studies have turned up in 2020, after the market traded down to its lowest levels since 2003 earlier this year. There is evidence of a longer-term bottom following the latest push back through 0.7000, though at this stage, there is risk for a pullback to allow for shorter term studies to unwind. Setbacks should now be well supported ahead of 0.6500.

• R2 0.7206 – 17 April high, 2019  – Strong
• R1 0.7183 – 22 July/2020 high – Medium
• S1 0.7013 – 21 July low – Medium
• S2 0.6921 – 14 July low – Strong

AUDUSD – fundamental overview

Aussie has been well bid overall of late, on the back of broad based US Dollar outflow. Still, with the risk outlook shaky, and worry associated with the coronavirus ticking back up, we suspect additional upside will be limited for the time being. Looking ahead, key standouts on the calendar include US reads in the form of Case Shiller, consumer confidence and the Richmond Fed manufacturing index.

USDCAD – technical overview

Has been in the process of correcting since topping out earlier this year above 1.4600. At this stage, with the correction well extended, the market is likely to find solid support in the 1.3200-1.3400 area, ahead of a resumption of gains. Ultimately, only a weekly close below 1.3300 would suggest otherwise.

• R2 1.3647 – 14 July high – Strong
• R1 1.3601 – 20 July high – Medium
• S1 1.3331 – 28 July low – Medium
• S2 1.3315 – 10 June low – Strong

USDCAD – fundamental overview

The Canadian Dollar has enjoyed a nice run of late, with the currency getting a boost from ongoing broad based US Dollar outflow. Still, with the risk outlook shaky, we suspect additional upside will be limited for the time being. Looking ahead, key standouts on the calendar include US reads in the form of Case Shiller, consumer confidence and the Richmond Fed manufacturing index.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom, after the market collapsed below massive psychological support at 0.5500 earlier this year. The latest break back above the 0.6600 area further strengthens this outlook, with the market back in uptrend mode as per the weekly Ichimoku cloud. Any setbacks are expected to be well supported ahead of 0.6200.

• R2 0.6740 – 2 January/2020 high – Strong
• R1 0.6704 –  28 July high – Medium
• S1 0.6559 – 21 July low – Medium
• S2 0.6503 – 14 July low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been well bid overall of late, on the back of broad based US Dollar outflow. Still, with the risk outlook shaky, and worry associated with the coronavirus ticking back up, we suspect additional upside will be limited for the time being. Looking ahead, key standouts on the calendar include US reads in the form of Case Shiller, consumer confidence and the Richmond Fed manufacturing index.

US SPX 500 – technical overview

The market has been in recovery mode since bottoming out in March. Still, the recovery is classified as corrective, with a lower top sought out below the record high from February, ahead of the next major downside extension, eventually back below the March low.

• R2 3398 –  20 February/Record high – Strong
• R1 3294 – 23 July high – Medium
• S1 3114 – 9 July low – Medium
• S2 2936 – 15 May low – Strong

US SPX 500 – fundamental overview

Although we've seen attempts at recovery in response to unlimited QE from the Fed and massive US stimulus, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for additional runs to the topside, on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, tension on the global trade front, geopolitical risk, and ongoing worry associated with recovery post coronavirus, should weigh more heavily on investor sentiment in 2020.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1700.

• R2 2000 – Psychological – Strong
• R1 1981 – 28 July/Record high – Medium
• S1 1790– 14 July low – Medium
• S2 1747 – 26 June low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, coronavirus fallout, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

A higher low is sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 8,000 would delay the constructive outlook. The latest push back above 10,500 further encourages the bullish prospect. Shorter studies are however stretched and warn of a pullback ahead.

• R2 12,000– Round number – Medium
• R1 11,420 – 27 July/2020 high – Strong
• S1 10,000 – Psychological – Medium
• S2 8,815 – 27 June low – Strong

BTCUSD – fundamental overview

Bitcoin has enjoyed a nice recovery since bottoming in March, with the runup in stocks and hype around the halving event contributing to a lot of the momentum. Interest from well known traditional market participants is helping to generate plenty of buzz as well. At the same time, given the extended nature of technical readings into important resistance, we see this as timing well for another period of weakness, especially with global equities once again looking vulnerable.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of attempting to establish a meaningful base after stalling out in the latter half of 2019. Look for setbacks to be well supported above 200, in favour of a push back towards and through the 2019 high up at 363.

• R2 363 – 2019 high – Strong
• R1 334 – 27 July high – Medium
• S1 267 – 24 July low – Medium
• S2 215 – 27 June low  – Strong

ETHUSD – fundamental overview

While there is plenty of Ether demand built up, with so much optimism around prospects for the blockchain, given all of the development going on in the decentralised finance space, macroeconomics will likely play a weighing influence into rallies, with Ether expected to underperform in a risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.