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May 4, 2018

U.S DOLLAR STRENGTH DOMINATES THE CURRENCY MARKET ACTION

MIGHTY GREENBACK

The greenback continued to roar higher this week, as the recent breakout up move in the U.S dollar index showed no signs of abating. The U.S dollar index moved to trading levels not seen since January this year, as the dollar buying frenzy spilled over into the new trading month. The FOMC Policy Meeting provided plenty of volatility in the U.S dollar as the FOMC kept rates on-hold, but even a slightly less hawkish policy statement failed to stop the U.S dollar's advance. The U.S dollar's ascent became far reaching across the spectrum of currency market, with the U.S dollar gaining broadly against G-7, emerging market and commodity related currencies.

  • The USDJPY is bearish while trading below the 109.45 level, further losses towards the 108.50 and 108.00 levels seem possible.

  • If the USDJPY pair moves above the 109.45 level, buyers may test towards the 110.00 and 110.45 levels.

EURO BELOW 1.2000

The euro currency tumbled below the 1.2000 level against the U.S dollar this week, with the EURUSD pair slumping to a four-month trading-low, as the sell-off edged closer to the 1.1900 level. The euro traded below its key 200-day moving average for the first time since April, 2017, on the back of the relentless move higher in the U.S dollar index. The eurozone economy also released softer than expected CPI inflation figures this week, with both month-on-month and annual CPI readings coming in below the market's expectation.

  • The EURUSD pair remains strongly bearish while trading below the 1.2000 level, further losses towards 1.1900 and 1.1850 appear possible.

  • If the EURUSD pair moves above the 1.2000 level, key resistance is then found at the 1.2038 and 1.2100 levels.

EURUSD chart

GOLD UNDER PRESSURE

Gold continued to remain under selling pressure this week, as traders followed the end of April trend, and moved away from the yellow metal and into the U.S dollar. Gold fell to levels not since December 29th, 2017, as commodity markets moved lower, and investors moved their money into U.S treasury bonds as U.S yields continued to climb. Spot gold eventually found technical support from the $1,301 level, which marked a rapid decline from the April high, when the price of spot gold hit $1,365.

  • XAUUSD is bearish while trading below the $1,320 level, further losses towards the $1,297 and $1,289 levels seem possible.

  • If the XAUUSD pair trades above the $1,320 level, buyers may test the $1,328 and $1,335 levels.

CRYPTOS HOLD SUPPORT

The broader cryptocurrency market advanced higher this week after an early week sell-off, as strong dip-buying was seen after across the alternative coin-space. Despite suffering from depressed trading volumes, popular cryptocurrencies such as Bitcoin, Ethereum, Litecoin and Ripple managed to gravitate higher. Bitcoin continued to hold firm towards the $9,500 level, while Ethereum moved towards the $750 level, which marked a strong rebound from the April lows, and its highest trading level since early March.

  • LTCUSD is bullish while trading above the $140 level, further upside towards the $175 and $200 resistance levels appears likely.

  • If the LTCUSD pair falls below the $140 level, sellers may test back towards $123 and psychological $100 level.

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