S&P500 gained 1.5% on Tuesday after global markets found a support level. Positive vibrations continue to spread across on Wednesday morning, causing the growth of European indices.
However, from the dynamics of the major currencies, it more and more seems that the peak of the bullish trend has already been passed. For now, cautious purchases on the downturns remain, but the methodical growth of the dollar indicates that yesterday’s calm is just a small respite in the framework of a wide curtailment of risk positions.
The dollar index exceeded 93, overcame the resistance of the converging range, and get closer to the area of this year’s highs that we saw four months ago. This speaks of a technical breakdown, however, to confirm it, we should wait for an increase above the maximum values in March at 93.4.
In the largest currency pairs’ dynamics, the growth of the dollar prevails, which, together with the fall in the yield of US debt securities, indicates a broad craving for defensive assets.
On the EURUSD chart, methodical selling on intraday growth is clearly visible, and the general downtrend was formed in early June. Worse, there is a death cross hanging over the pair as the 50-day moving average falls below the 200-day. And that will happen in the coming days, which, as a rule, sharply intensifies the sale.
GBPUSD was below 1.3600 in the morning, having fallen below the support line at 1.3700 and its 200-day moving average earlier this week. The pound is often directly correlated with the stock market, so the current trend is in favor of a recovery in sales.
AUDUSD is also in the grip of bears, having pulled back to 0.7300, the lowest since last November. The Chinese yuan stands out from this trend, gaining strength against the dollar for the second day in a row. Selling USDCNH began to intensify as it approached the 200-day moving average.
As we have seen many times, the stock market can go up by inertia, but very often it joins the dynamics of debt and currency markets.
Gold develops a decline after failing to break the 200-day moving average. Silver ended a long period of consolidation, plummeting to $25. It seems that speculators in the precious metals market maintain a bearish mood, which can spread to gold very quickly.
