Forex Market: Most Valuable Currencies Ease Off Weekly Highs

Analysis: Key Currencies Dip Amid US Dollar Shorts

The forex market experiences a pullback as the best currency pairs to trade, including EUR to USD, EUR to GBP, and AUD to USD, step back from their recent peaks. Traders are navigating a landscape shaped by month-end dynamics, focusing on taking profits from US dollar short positions.

EUR to USD Pulls Back from Four-Month High

EUR to USD, one of the most traded currency pairs, retreats from its near four-month high of $1.1017 observed on Wednesday. Despite German retail sales rebounding from a 0.8% drop in September, the pair faces end-of-month profit-taking on US dollar shorts. As the US dollar vies for the title of the strongest currency in the world, EUR to USD’s current trajectory pushes the cross toward its November uptrend line at $1.0906. Potential support lies between last Wednesday’s low at $1.0853 and the July low at $1.0834. A surprising rise above the late June high at $1.1012 and this week’s peak at $1.1017 could engage the August peak at $1.1065.

EUR to GBP Slides Toward October Low

EUR to GBP, also among the most traded currency pairs, experiences a swift descent from its six-month high at £0.8766, sliding towards its October low of £0.8617. A potential fall below £0.8617 seems likely, with the focus shifting to the late August high at £0.8611 and the early June and mid-September lows at £0.8569 to £0.8568. Resistance may be encountered at the early November low at £0.865 if a minor rebound occurs.

AUD to USD Correction After 3 ½ Month High

AUD to USD witnesses a correction after reaching a 3 ½ month high at $0.6676. The correction could lead the pair back toward the 21 November high and the 200-day simple moving average (SMA) at $0.6589 to $0.6581. As long as the lower August and September highs and last Wednesday’s reaction low at $0.6522 to $0.6511 hold, the medium-term uptrend remains intact. A rise above $0.6676 could bring the early July high at $0.6705 into view.

Most Valuable Currencies: US Dollar Up

US Dollar Outlook

The strongest currency in the world extends its recovery, driven by a bounce in U.S. Treasury yields. San Francisco Federal Reserve President Mary Daly’s remarks contribute to the dollar’s resurgence. The sentiment emphasized a growing divide between hawkish and dovish sentiments within the Federal Open Market Committee (FOMC). Traders are awaiting Fed Chair Powell’s speech on Friday for further clarity on the monetary policy outlook.

EUR to USD and GBP to USD Technical Analysis

As the U.S. dollar gains strength, most valuable currencies witness pullbacks. For EUR to USD, a breakdown below the lower boundary of a short-term ascending channel at 1.0890 may lead to further declines. Conversely, a resurgence could target the 61.8% Fib retracement level at 1.0960. GBP to USD experiences a moderate pullback but is expected to maintain its near-term uptrend, with key support at 1.2590. A breach below may lead to a drop towards the 100-day simple moving average and 1.2460.

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