The positive market mood should support appetite for risk at the expense of safe-haven assets like the Dollar and Japanese Yen which have both weakened over the past 24 hours. However, the risk-on sentiment is unlikely to last given how escalating US-China trade tensions and global growth concerns remain dominant market themes.
King Dollar was not so mighty on Tuesday, weakening against every single G10 currency thanks to vaccine optimism and reopening hopes. Focusing on the technical picture, the Dollar Index remains in a very wide range on the daily charts with support around 99.0. A strong daily close below this point may swing open the doors lower towards 98.50 and 97.80.
Euro takes advantage as Dollar weakens
The Euro wasted no time in exploiting a weaker Dollar this morning, as prices jumped to a fresh one week high above 1.0936.
Expect the EURUSD to push higher in the week ahead if the Dollar continues to weaken amid the improving market sentiment. Looking at the technical picture, the EURUSD remains in a very wide range on the daily charts with support at 1.0740 and resistance 1.1000.
While a depressed Dollar could push prices back towards 1.1000, it may take a fundamental catalyst for prices to break above this stubborn resistance. Alternatively, sustained weakness below 1.1000 could encourage a move back down to 1.0850.
USDCAD eyes 1.3850
Expect the Canadian Dollar to appreciate this week as Oil prices recover.
If the Canadian Dollar holds its ground against the Dollar, the USDCAD may sink towards 1.3850. A breakdown below this level could pave a way towards 1.3680.
Alternatively, if 1.3850 proves to be reliable support, prices may rebound back towards 1.4050.
Commodity spotlight – WTI Oil
Oil prices are positioned to push higher as economies across the globe relax lockdown measures.
However, gains will most likely be capped by escalating trade tensions and fears around slowing global growth.
Looking at the technical picture, a solid weekly close above $34 may open the doors back towards $40.
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This article was originally posted on FX Empire
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