Intraday Market Analysis – USD Consolidates
AUDUSD struggles to bounce
The Australian dollar recoups losses over upbeat retail sales in May. The price action has been looking to hold on to its recent gains above 0.6850. An oversold RSI attracted some buying interest, but buyers will need to clear the psychological level of 0.7000 before a rebound could take a foothold. Then the aussie would have a chance of a broader recovery above 0.7070. On the downside, a drop below 0.6890 would lead to a retest of 0.6850 which is a critical floor to keep last month’s rebound intact.
USDCHF breaks lower
The US dollar stabilised after Fed officials stated that rates could reach 3.5% by the end of the year. After failing to produce a new high above the parity, the dollar’s fall below May’s lows (0.9550) has put the bulls on the defensive, invalidating the June rally. Sentiment has turned downbeat and the price’s struggle to bounce above 0.9630 indicates that the path of least resistance might be down. As trapped buyers seek to bail out, the greenback could be vulnerable to a new round of sell-off with 0.9460 as the target.
UK 100 seeks support
Equity markets found some support from China loosening its Covid policies. The FTSE bounced higher after clearing the last leg of sell-off at 7320. A combination of short-covering and momentum buying has stirred up volatility and eased the bearish pressure. 7450 is the next stop and the RSI’s double top in the overbought area may temper the bullish drive. As the index takes a breather, 7230 is the first level where short-term buyers may buy the dip. 7080 is the second line of defence against a deeper correction in the medium-term.