The US dollar has been making waves in the foreign exchange market, as it attempts to make a comeback against some of the major players in the industry. In recent trading sessions, the greenback has shown a strong bullish posture against the Australian dollar, Japanese yen, Euro, and British pound. In this article, we will take a closer look at the recent developments in the currency markets and what traders can expect moving forward.
AUD/USD: Bulls Fighting Back with a Bullish Engulfing
The Australian dollar has been on the backfoot against the US dollar in recent weeks, with the pair breaking below a bearish rising wedge chart formation. However, 24 hours later, the pair turned higher and left behind a bullish engulfing candlestick pattern, indicating that the bulls aren’t ready to give up just yet. Follow-through will be crucial in the coming trading sessions, as an upside push from here could maintain the bullish posture since November. On the other hand, confirming a breakout under the wedge would offer an increasingly bearish outlook.
USD/JPY: Trendline Breakout Hits a Snag
The US dollar closed at its highest against the Japanese yen in about a month, pushing USD/JPY further above a key falling trendline from October. This opens the door to a broader reversal, but the 50-day Simple Moving Average (SMA) is currently acting as resistance and undermining the breakout. A confirmatory push above the 50-day SMA would likely shift the focus back to the upside, with key support around 127.98 and resistance at the midpoint of the Fibonacci extension at 135.116.
EUR/USD: Rising Wedge Breakout Meets Indecision
The US dollar may be readying to extend its gains against the euro, as EUR/USD confirmed a breakout under a bearish rising wedge. However, prices then left behind a doji candlestick pattern, which is a sign of indecision. Upside follow-through after the doji may undermine the wedge breakout, pivoting prices lower and putting the focus on the floor of the wedge, which may hold as new resistance. If losses continue to extend, the focus would shift to the January low at 1.0483.
GBP/USD: Double Top Neckline in the Spotlight
The US dollar is facing its next significant test against the British pound, as GBP/USD sits on the neckline of a bearish double top chart formation. Clearing this point, around 1.1951, would open the door to extending losses toward the 1.1639 to 1.1738 inflection zone. However, clearing the 100-day SMA, which may hold as support, would be necessary to get there and maintain the upside focus. On the other hand, pivoting higher from here may open the door to revisiting the 1.2293 to 1.2444 resistance zone.
Conclusion
In conclusion, the US dollar has been making a strong showing in recent trading sessions, as it attempts to make a comeback against some of the major players in the foreign exchange market. With the US economy recovering faster than its counterparts, traders can expect the greenback to maintain its bullish posture in the near term. However, as always, it is crucial to keep an eye on key levels and follow-through, as any unexpected developments could quickly shift the focus in the opposite direction.
