Currencies: Is the dollar calming down?

The appointment of Scott Bessent as head of the US Treasury could well be the catalyst to calm the dollar's ardor. Technically, the dollar is trying to make a break for it, but if you followed last week's article, you know that it's not the case. At least for the time being.

Last week, we warned of a possible incursion by the dollar index above its 2023 highs of 107.35. "The Fibonacci analysis allows us to refine things and suggests a possible incursion as far as 108.00, without tainting the prospect of further consolidation. "The index has just hit 108.07 and seems to be showing signs of a lull, thanks to Scott Bessent's appointment, which can only be confirmed by a break of 106.14. At that point, the most likely scenario would be to stay within the congestion that has been in place for the past two years and, why not? return towards the lower boundary. This aggressive scenario would then be paralleled by a resumption of the current downtrend in US bond yields (see article here).

Source: Bloomberg

In parallel, we'll be keeping an eye on 1.0335 to halt the bleeding on the EURUSD, while first resistance lies at 1.055/66.

The USDJPY seems to be calming down after a close of 156.84, but we'll be keeping an eye on 151.50 as initial downside support, the breach of which is the only way to confirm that the uptrend underway since last September has come to a halt. The same applies to theUSD CHF, with an initial resistance zone around 08963/0.9016 and initial support at 0.8820.

In the commodity currencies, AUD USD is attempting to bounce back above 0.6428, but needs to break above 0.6555 to open up any real rebound potential, while NZD USD is testing support at 0.5850, with initial resistance at 0.5944.