Consumer sentiment key to the Dollar
Dollar reversed earlier rebound in US session after worse than expected U of Michigan consumer sentiments that dropped to 78.7, a 10 months low, versus expectation of 84, prior at 84.7. However, such weakness was only temporary so far. Recent corrective rebound in dollar could have finished earlier today but near term support against majors need to be taken out to confirm such case. Otherwise, more choppy trading will still continue.
Earlier today, the Japanese yen was strengthened mildly after China unexpectedly raise benchmark lending and deposit rates by 27bp to 6.12% to curb inflation.
USD/CHF
Daily Pivots: (S1) 1.2263; (P) 1.2304; (R1) 1.2370; More.
USD/CHF’s rebound from 1.2237 has extended further to 1.2379, touching mentioned 1.2379 resistance. Subsequent sharp fall in early US session suggest the rebound from 1.2237 has possibly completed with three waves up to 1.2379. However, a firm break below 1.2291 support is needed to confirm such case and bring decline to 1.2237 low. Otherwise, the rebound from 1.2237 might still extend further.
On the upside, as long as rebound is limited by 1.2379 resistance, recovery should still be brief and further decline should still resume sooner rather than later towards 1.2182 cluster support.
In a bigger picture, USD/CHF’s fall from 1.2594 was still contained by mentioned cluster support of 1.2182 (61.8% retracement of 1.1919 to 1.2594 at 1.2177) As discussed before, subsequent strong rebound that pushed USD/CHF above 1.2365 resistance has shifted favors back to the case that whole medium term decline from 1.3283 has indeed completed at 1.1919 already and subsequent rebound from 1.1919 is merely part of a large consolidation to the whole fall from 1.3283. Such consolidation could extend at least a few more weeks before completion.
A firm break below 1.2182 cluster support will indicate fall from 1.2594 has resumed for 1.1919 low. Otherwise, range trading between 1.2182 and 1.2594 is still in progress and risk of another rise remains.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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