Dollar keeps firmer on softer risk tones in the market

  


EUR/USD falls to a fresh one-week low

EUR/USD D1 08-09


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The market is posturing more defensively in European trading and that is keeping the dollar and yen more bid so far on the session, with commodity currencies leading the way lower.

EUR/USD has dipped to a fresh one-week low, falling to 1.1826 with sellers now seizing near-term control on a break below its 200-hour moving average (blue line).

There is minor support from the 38.2 retracement level at 1.1815 next but the 1.1800 level will be a key one to watch in sizing up any further downside leg for the pair.

Elsewhere, AUD/USD is down by nearly 0.5% to 0.7350 as sellers also seize near-term control o a break below key near-term levels pointed out here.

USD/JPY is also trading lower to 110.17 from a high of 110.44 at the tail-end of Asia Pacific trading, with 10-year Treasury yields retreating from 1.37% to 1.346% currently.

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There isn’t one specific headline proving to be a drag on risk sentiment at the moment but you can pretty much argue that it is perhaps a cumulative weight:

  • Delta variant concerns still persisting for the most part, weighing on recent economic data and causing supply chain disruptions; leading to higher inflation
  • Equities are at frothy levels allowing scope for profit-taking after having seen the S&P 500 and Nasdaq clinch record highs over the past few weeks
  • China worries continuing to mount with Fitch the latest to downgrade Evergrande and sees a ‘probable’ default, which could have wider reverberations
  • Central banks are becoming less confident in scaling back on pandemic support, with a dovish-like taper becoming the staple i.e. economic outlook darkening
  • Cryptocurrency selloff not helping with the mood this week, with Bitcoin and Ethereum down another 5% on the day currently
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