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Feb 04 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Chart Support And BOE Can't Stop Dollar Breakout

By Randolph Donney  —  Feb 04 - 10:46 AM

Though only about 12% of the dollar index, today's swift post-BOE GBP/USD rebound briefly interrupted the index's bullish breakout above the 38.2% Fibo of the September-January slide at 91.32, as did the majority index component EUR/USD initially holding 50% Fibo of its November-January rise support at 1.19755.

There's some 100-day moving average support at 1.1963 below EUR/USD's 50% Fibo, but not much else until the 61.8% Fibo at 1.1887.

The next resistance for the dollar index is by the falling 100-day moving average, last at 91.85, and the 50% Fibo of the September-to-January downtrend at 91.976, by December's 91.964 high, which looks easily in reach if Friday's NFP report is near or above forecast.

The dollar index is being driven up by the dollar's gains against the euro and yen due to a string of better-than-expected U.S. economic data, topped off by today's jobless claims nAPN045RMN.
That and Wednesday's ADP beat nAQN03R411 and ISM non-manufacturing index rising to nearly two year highs nN9N2H701B is bolstering the notion the U.S. is maintaining its relative economic growth advantage over the euro zone and Japan.

And that view is bolstered by a major fiscal stimulus bill working its way through Congress and the U.S. lead in COVID-19 vaccinations vs the EU and Japan.

Fueling the dollar's advance is the squeezing of spec shorts, particularly vs the euro and yen.

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Source:
Refinitiv IFR Research/Market Commentary

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