On the daily chart below, we can see that the buyers are struggling breaking decisively above the 0.94 handle. The falling channel was diverging with the MACD and this generally leads to the price rallying back to the top of the channel once there’s a breakout. So, technically the buyers will target the 0.96 handle and if the US data keeps coming in hot, then it’s basically assured that we will get there.
Yesterday, Fed Chair Powell opened the door for a 50bps hike and a higher terminal rate if the data remains strong which prompted the market to buy the USD aggressively. The next big event now is the NFP report on Friday and if we get a beat, then we will most likely see the USD bid across the board, while a miss would cause some strong weakness in the greenback.
On the 4 hour chart below, we can see more closely the struggle the buyers are finding extending past the 0.94 handle. We got quite a big pullback on the first try breaking out of that resistance, but the buyers defended the support at 0.9287.
Given that the market is now pricing a higher chance of a 50bps hike, a higher terminal rate and chances of good US data, we should expect the buyers to remain in control and keep bidding the USD to new higher highs.
On the 1 hour chart below, we can see where we would most likely find buyers in case the price pulls back before pushing up again. The area between 0.9400 and 0.9380 has some technical support. The 0.94 handle could be a psychological support being a round number and the 38.2% Fibonacci retracement level would bring the market back into equilibrium from overstretched highs after yesterday’s huge rally.
