Intraday Market Analysis – USD Seems Overextended

US Stocks: S&P 500 Ended The Day Above 3,900! Forex: What Could Influence USD/JPY?

EURUSD sees further downside

The euro continues to weaken over growth concerns in the eurozone amid the war in Ukraine. A tentative break below 1.0500 further put the euro under pressure.

A lack of rebound suggests that the bears are confident enough to hold onto their chips, while the bulls stay on the sidelines. A bullish RSI divergence shows a slowdown in the sell-off.

However, only a rally above 1.0650 could ease the selling pressure and help turn sentiment around. Otherwise, 1.0400 from January 2017 would be the next stop.

USDCHF hits 2-year high

The US dollar rallies ahead of an expected Fed rate hike this week. The pair is grinding a rising trendline and is about to reach a two-year high at 0.9800.

The RSI has ventured into the overbought area on the daily time frame. Meanwhile, the indicator’s bearish divergence suggests a loss of momentum in the parabolic ascent. The pair could be due for a pullback for the bulls to catch their breath.

The demand zone between the trendline and 0.9670 from the latest consolidation is a key area to gauge short-term buying interest.

US 30 struggles for support

The Dow Jones 30 recoups losses as traders take profit ahead of the FOMC. A break below 33300 forced bulls to bail out and suggests that the liquidation phase is yet to end.

The demand zone around 32700 from March’s rebound is a critical level to test buyers’ resolve. An oversold RSI has attracted bargain hunters, but the rebound will need to clear 33900 before a bullish reversal could materialize.

Failing that, February’s lows around 32300 would be the support of last resort before a deeper correction towards 31000.

US Stocks: S&P 500 Ended The Day Above 3,900! Forex: What Could Influence USD/JPY?

Jing Ren

Jing-Ren has extensive experience in currency and commodities trading. He began his career in metal sales and trading at Societe Generale in London. Later on he worked as a senior analyst within the FX brokerage industry where he developed strategies in trading and risk management. With solid understanding of market dynamics he founded Wensfer to offer research and asset management services.