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Last week, we drew your attention to the relative underperformance of all European currencies against the US dollar. What may have looked like a simple technical recovery has continued to spread. In the end, the dollar rose against all the G10 countries: the euro, the yen, the pound, the Swiss franc, etc. The extent of the damage is particularly remarkable against the Swedish krona and the Japanese yen.
The latter has not only weakened against the dollar, but also against European currencies (EURO, GBP and CHF) and commodity currencies (CAD, AUD, NZD). The technical configuration of the CADJPY is interesting to follow insofar as a double bottom has just been validated by breaking out of the 100.37/65 whose theoretical potential is 106.48.
As mentioned in the headline, the rise in the dollar (white) is allowing US stocks to outperform (blue) and is weighing on gold (inverted chart in red).
The million-dollar question (obviously) is how far can the dollar rebound?
If we take a quick look at the DXY chart, we see that resistance at 102.20/40 has been breached, it becomes a support zone on the downside, and an intermediate target at 104.00 has already been approached. This resistance is the last rampart before the March highs at 105.88. We can watch in parallel the 10.72 on the USDSEK before considering a new phase of weakness of the dollar which should therefore benefit again to gold and European markets. More on this in the next article.
