US dollar index bulls battle to hold onto recent gains

DXY down

The US dollar index struggled to hold onto recent gains as US bond yields started to turn down and tech stocks closed in on gains for the week. The greenback started to come under pressure against a broad basket of currencies after the United States CPI report failed to show signs of strong inflation as markets had been fearing. Improving risk sentiment from US Senate agreeing the $1.9 trillion stimulus package from the Biden administration also encourage traders and investors to buy riskier asset classes. The US dollar index attempted to claw back loss as the week came to an end, due a rise in bond yields and a reversal of fortunes for the Nasdaq.

• The USDJPY pair is only bearish while trading below the 108.40 level, key support is found at the 107.50 and 107.00 levels.
• The USDJPY pair is only bullish while trading above the 108.40 level, buyers may test towards the 109.00 and 109.50 resistance levels.

Canadian strength

The Canadian dollar continued to strengthen against the US dollar this week as the ongoing surge in oil prices underpinned bullish sentiment towards the Canadian currency. The USDCAD tumbled below the 1.2600 support level as the potent combination of US dollar weakness and rising oil prices weighed heavily on the pair. The Bank of Canada kept interest rates unchanged this week but stopped short of sounding hawkish, although they did recognize that the Canadian economy had surprised to the upside. The Canadian dollar also benefitted as the monthly jobs report came in much better than expected with a +259,200 headline number.

• The USDCAD pair is only bearish while trading below the 1.2700 level, key support is found at the 1.2500 and 1.2400 levels.
• The USDCAD pair is only bullish while trading above the 1.2700 level, buyers may test towards the 1.2740 and 1.2800 resistance levels.

Bitcoin bounces

Bitcoin staged a major upside recovery higher this week, following more bullish fundamental news surrounding the top cryptocurrency. Bitcoin got off to a flying start on the crypto market, following news that US citizens will soon be receiving $1,400 stimulus checks. Traders bought the BTCUSD pair as previous stimulus check handouts have seen US citizens investing in Bitcoin and other top cryptos. News that a Chinese beauty app had made a sizable investment it Bitcoin also propelled the BTCUSD pair above the $55,000 level this week. Sentiment data showed that social media was the most bearish towards Bitcoin in over five months, despite the massive weekly advance. 

• The BTCUSD  pair is only bearish while trading below the $52,500 level, key support is found at the $50,000 and $47,000 levels.
• If the BTCUSD pair trades above the $52,500 level, buyers may test towards the $57,000 and $58,400 resistance levels.

ECB angst

The European Central Bank struck a dovish tone at this weeks policy meeting, as the ECB sounded increasingly cautious towards any notion of an economic recovery in the eurozone. The ECB announced that they would be keeping rates unchanged, however, the decision to speed up the pandemic bond-buying scheme. ECB President Christine Lagarde said that the COVID-19 pandemic and ongoing lockdown was still causing trouble for the eurozone economy. The single currency showed a muted reaction to the policy decisions, while European indices held firm. The German DAX and the French CAC 30 indexes also posted strong weekly this week as stock traders cheered the US stimulus bill being approved.

• The EURUSD is only bullish while trading above the 1.2060 level, key resistance is found at the 1.2250 and 1.2315 levels.
• The EURUSD is only bearish while trading below the 1.2060 level, key support is located at the 1.1830 and 1.1600 levels.