Market News & Analysis


Top Story

End of Year US Dollar Selloff Continues to Drive FX Markets

On Friday, the DXY was down over 0.6% and today to selloff continues.  Price today is down nearly another 0.4% in US trading as the DXY looks to test the spike lows from the Christmas night (in US session).  Price is diverging on a short-term time frame; however, yearend flows will dominate and technical won’t be as relevant if people need to get things done for end of year.

Source: Tradingview, City Index

Even though technicals may not be as important when funds need to get things done, it is still important to look for areas where price may pause or reverse.  DXY is well underneath the upward channel it has been in since mid-2018.   If DXY breaks through recent spike lows,  the next level is the 50% retracement level from the June 2018 lows to the highs on September 30th of this year at 96.43.  Below that is a zone for support between the 61.8% retracement of the same time period and horizonal support, between 95.66 and 95.84.  Resistance is back at the upward sloping channel line near 97.50.

Source: Tradingview, City Index

As a result, many of the US Dollar counter currencies are continuing to trade higher. 

EUR/USD has broken decisively above 1.1200 and the 61.8% retracement level from the June highs to the September 30th lows at 1.1207.  If this move continues, price can easily run up to 1.1350.

Source: Tradingview, City Index

USD/CHF twice failed to take out the 61.8% retracement level from the April 25th highs to the august 12th lows and put in a double top.  Price is moving towards the target of the double top near .9640 and well as the August 12th lows near .9663. 

Source: Tradingview, City Index

Commodity currencies have been hit as well vs the US Dollar, with USD/NOK being on of the hardest hit over the last few weeks.   The bid is the Norwegian Krone has been hit by a double whammy of a weak US Dollar and strong oil.  Price has fallen from a high of 9.1846 on December 12th to current levels near 8.7894.  Along the way, and pair has broken the 200-day moving average, horizontal support and the 61.8% retracement of the move from the low on July 19th to the highs on December 12th.  The RSI is in oversold territory. 

Source: Tradingview, City Index

Note the Australian Dollar, the New Zealand Dollar and the Canadian Dollar are also testing to putting in new recent highs vs the US Dollar as well.

It is important to remember that until the market reopens January 2nd, these appear to be year end flows.  Many of the US Dollar moves continue to be exaggerated. The technicals mentioned here will become more useful once we enter the new year. 


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.