Dollar strengthens, raising concerns about a potential “bull trap”

• The US Dollar Index (DXY) regained control around 104.0, despite weak US industrial orders data.
• Mixed US GDP data led to a dollar pullback, highlighting market sensitivity to economic indicators.
• Technically, the DXY surpassed the 100-day moving average, but a “bull trap” formation is possible.
• A break above 104.60 could lead to further dollar gains, while a sustained downtrend might see it fall to 103.16.
• The Fed’s stance on future rate cuts remains unclear, potentially impacting dollar sentiment.

Euro struggles as economic concerns persist

• EUR/USD:

  • Technical Outlook: Bearish. The recent decline below the 1.0815 level and the 100-day SMA at 1.04.00 suggest a potential continuation of the downtrend.
  • Key Levels:
    • Resistance: 1.0835, 1.0866
    • Support: 1.0795, 1.0316, 1.03.00
  • Factors to Consider:
    • US economic data strength (GDP, PCE)
    • Fed policy expectations
    • Eurozone economic sentiment
    • Potential government shutdown in the US
    • ECB policy stance
  • Forecast: EUR/USD is likely to weaken further in the near term, potentially reaching the 1.0795 support level. However, a sustained decline below 1.03.00 is unlikely unless the economic data and central bank stances shift significantly.

British pound forms a descending channel

• GBP/USD:

  • Technical Outlook: Bearish. The wave analysis suggests a continuation of the downtrend within a descending channel.
  • Key Levels:
    • Resistance: 1.2627, 1.2500
    • Support: 1.2039
  • Factors to Consider:
    • Overall market sentiment towards the pound
    • Further economic data releases
  • Forecast: GBP/USD is likely to decline further in the near term, potentially reaching the 1.2500 support level. A break below this level could lead to a decline towards the 1.2039 target.

Australian dollar weakens after inflation data

• AUD/USD:

  • Technical Outlook: Bearish. The recent decline below the 0.6584 support level suggests a continuation of the downtrend.
  • Key Levels:
    • Resistance: 0.6526, 0.6560
    • Support: 0.6453
  • Factors to Consider:
    • RBA policy expectations
    • Future inflation data in Australia
  • Forecast: AUD/USD is likely to weaken further in the near term, potentially reaching the 0.6453 support level. A break below this level could indicate further downside potential.

New Zealand dollar drops after RBNZ decision

• NZD/USD:

  • Technical Outlook: Bearish. The recent decline below the 0.6141 support level suggests a continuation of the downtrend.
  • Key Levels:
    • Resistance: 0.6180, 0.6236
    • Support: 0.6085
  • Factors to Consider:
    • RBNZ policy expectations
    • Future economic data releases in New Zealand
  • Forecast: NZD/USD is likely to weaken further in the near term, potentially reaching the 0.6085 support level. A break below this level could indicate further downside potential.

Overall, the market is facing mixed signals and uncertainties:

• The dollar’s strength might be temporary, raising concerns about a “bull trap.”
• The eurozone’s economic struggles continue to weigh on the euro.
• The pound’s downtrend and the RBNZ’s dovish shift impact other currencies.

Key Events to Watch:

• US PCE inflation data on Thursday
• G20 finance ministers’ meeting on February 28-29
• Eurozone inflation data on Thursday