Last week, U.S. economic data showed that the U.S. economy was resilient, coupled with signs of slowing inflation, with final GDP confirming an annualized growth rate of 5.2%, and the release of core PCE price index data, which strengthened market risk aversion. The month-on-month increase was only 0.1%, lower than expected. Sentiment was also boosted by well-lower-than-expected UK consumer price index data, which saw UK inflation fall to an annualized rate of 3.9%, well below expectations of 4.3%. However, Canadian CPI data came in slightly higher than expected, but only slightly, slightly contradicting claims of lower inflation. Additionally, U.S. consumer confidence and sentiment data came in higher than expected.
Those factors pushed major U.S. stock indexes to an eighth straight week of gains, with the tech-heavy Nasdaq 100 hitting a record high.
technical analysis
dollar index
The U.S. Dollar Index formed a bearish candlestick last week and closed not far from the range low. The weekly closing price hit its lowest level in nearly 5 months and was down from prices 3 and 6 months ago, reiterating a long-term bearish trend.
These are all bearish factors, but there’s something even more bearish here – a weekly close below key long-term support at 101.56. Therefore, the price may still have a long way to go before reaching important support levels that may support its rise, which may give USD bears a technical boost.
Lower-than-expected U.S. inflation and other dovish economic data signals that interest rates should be cut sooner rather than later also provide support to bears.
USD/CHF
The USD/CHF currency pair fell sharply last week, although the Swiss franc gave up some of its gains against the US dollar over the weekend.
Technically, this downward move is significant as it reaches lows not seen since the 2015 Swiss Franc flash crash.
The pair does not like trends and Switzerland does not want its currency to be too strong as the price is in an area it has not reached in years and produced a strong bullish rally the last time it reached it. For brave long-term traders, look for this price There are signs of a major bullish reversal in the zone, which could be a wise move, all the way down to multi-year lows near $0.8300.
Another technical hurdle for further price declines could be a large round number not far below $0.8500, which has yet to be touched.
USD/CAD
The USD/CAD currency pair fell sharply last week, ultimately recording its lowest weekly close in nearly five months. The bearish move was helped by a weaker U.S. dollar, but the Canadian dollar also strengthened due to higher crude oil prices, which in turn may be driven by military dangers to shipping near the Red Sea.
Despite these bearish signs, as you can see from the price chart below, the price has reached a strong support area that was last reached over the summer. The major bullish shift between $1.3100 and $1.3200 took a few weeks to manifest, but it wouldn’t be surprising if we see this area acting as support again.
Since the pair has historically trended poorly, intrepid traders would be better off looking for a medium to long-term bullish reversal below $1.3200 if the price continues to fall.
