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On Wednesday morning, the GBP/USD currency exchange rate passed the support of the 1.3770/1.3785 zone. The zone had kept the rate from declining since the middle of Tuesday's trading.

In regards to the near term future, the currency exchange rate was expected to decline to the support of the weekly S2 simple pivot point. However, support could be provided by the 1.3700 mark or another round exchange rate level.

On the other hand, a potential recovery would face the resistance of the 1.3770/1.3785 zone. Above the zone, the 55 and 100-hour simple moving averages were providing resistance at 1.3815 and 1.3825.

On Tuesday, the EUR/USD eventually passed the support of the weekly simple pivot point at 1.1858. By the middle of Wednesday's European trading hours, the pair had reached the 1.1830 level.

In the case that the decline of the EUR/USD continues, the currency exchange rate would most likely aim at the weekly S1 simple pivot point at the 1.1806 level. In addition, the 1.1800 mark could provide additional support.

On the other hand, a recovery of the pair would likely encounter resistance in the 200-hour simple moving average at 1.1835. Above the 200-hour SMA, the pair might find resistance in the weekly simple pivot point at 1.1858 and the 55 and 100-hour simple moving averages at 1.1861 and 1.1866.

Upside risks dominated the USD/CAD currency pair on Tuesday. As a result, the US Dollar edged higher by 132 pips or 1.06% against the Canadian Dollar during yesterday's trading session.

In the nearest future, the exchange rate is likely to continue to trend bullish. The potential target for buyers would be near the 1.2700 level.

Although, technical indicators suggest that the currency exchange rate might consolidate below the 1.2660 area within Wednesday's trading session.

During the first half of Tuesday's trading session, the British Pound declined by 55 pips or 0.36% against the Japanese Yen. However, the currency pair rebounded from a support line at 151.53 by the end of the session.

By and large, the GBP/JPY currency exchange rate could edge higher during the following trading hours. The potential target for buyers would be near the 152.00 area.

However, bullish traders may encounter resistance at 152.30 within Wednesday's trading session.

On Tuesday, the Australian Dollar declined by 73 pips or 0.98% against the US Dollar. A breakout occurred through the lower line of an ascending channel pattern during yesterday's trading session.

Given that a breakout has occurred, sellers could continue to drive the price lower during the following trading session. The potential target for the AUD/USD currency pair would be near the 0.7320 area.

However, the 200– hour simple moving average at 0.7360 could provide support for the currency exchange rate within this session.

The EUR/JPY currency pair bounced off a support level formed by the 50– hour SMA at 130.40 on Tuesday. As a result, the common European currency surged by 32 pips or 0.25% against the Japanese Yen.

All things being equal, the exchange rate could continue to trend higher during Wednesday's trading session. The possible target for bulls would be near the 131.00 level.

However, bullish traders may encounter resistance at 130.73 within the following trading session.

NZDUSD was forced to move back after marking two consecutive weekly wins, thanks to resistance from the descending trendline, which has been joining the highs from the 2021 peak of 0.7463.

The pullback from the three month high of 0.7169 sent the price below the 0.7100 level and the 200-day simple moving average (SMA), marginally though, turning the focus to the 38.2% Fibonacci retracement of the 0.7463 – 0. 6800 downleg at 0.7055.

With the RSI and the fast Stochastics losing steam, and the MACD having reached its previous resistance territory, speculation is growing that the price could remain under selling pressure in the near term. That said, an upturn cannot be ruled out at the moment as the RSI and the MACD continue to fluctuate within the bullish territory despite their recent weakness.

If the 0.7055 handle proves easy to clear on the downside, the next turning point could take place somewhere between the 20- and 50-day SMAs around 0.6995 and the 23.6% Fibonacci of 0.6959. A close below the 0.6932 floor could open the door for the 0.6877 support area, while beneath that, the bears will attempt to extend the bearish pattern past the 0.6800 bottom and towards the 0.6682 former resistance region last seen in October 2020.

Should the bulls resurface, driving the pair successfully above the trendline and the three-month high of 0.7169, some consolidation could immediately develop around the 0.7200 psychological mark before the 61.8% Fibonacci of 0.7253 comes on the radar. Yet, only a significant move above 0.7300 would clear the way towards the top of 0.7463.

All in all, NZDUSD is expected to give up some ground in the short term, especially if it slides below the next support of 0.7055.

Oil falls on stronger US Dollar.

It was a tough night for commodities in general overnight. Base metals fell, with aluminium giving back much of its Guinea gains. With New Yorkers concerned about US growth to start the week, leading to haven US Dollar strength, oil prices also wilted. Brent crude eased by 0.80% to $71.50, and WTI fell by 0.70% to $68.30 a barrel.

Both contracts have added 10 cents a barrel in a quiet Asia session, and in the overall context, the scale of the overnight oil price retreats was relatively modest at just over 50 cents a barrel. Oil’s short term direction will be dictated by what sort of mood New York arrives in this evening, as nothing has materially changed in the markets this week. Although admittedly, oil’s rally had looked like running low on momentum last week, even as the US Dollar sagged. The slowing of upward momentum after the US data, economic recovery doubts and US Dollar strength had raised the odds of a deeper downward price move.

Brent crude has double tops at $72.80 and $73.70 a barrel. Support is nearby at $71.25, the 100-DMA, and $70.50 a barrel. That could lead to a test of $70.00 a barrel, and failure will likely trigger stop-losses in volume. The ensuing spike lower would be, once again, a buying opportunity.

WTI closed below its 100-DMA overnight, today at $68.75, which now forms initial resistance. That is followed by $69.50 a barrel. Support lies at $67.70 and $67.00 a barrel. If WTI fails at $67.00, a deeper and more aggressive capitulation could occur. But like Brent, it is probably a dip for the brave to buy into.

Gold tumbles on US Dollar strength.

Gold has been warning for several days that its upward momentum had waned materially and that its rally was in trouble. Notably, in previous sessions, gold had been unable to rally on US Dollar weakness. Overnight, a slight rise in US yields and a severe bout of US Dollar strength set the downward correction in motion. Gold finished the overnight session 1.60% lower at $1794.00 an ounce.

Gold looks highly vulnerable to further US Dollar strength this evening. Although some short-covering has lifted gold slightly higher to $1797.50 an ounce in Asia, it looks like a dead cat bounce. Should the US Dollar fall by chance tonight and gold not rally still, the outlook will become darker still.

Gold has nearby resistance at $1800.00, followed by the 100 and 200-DMAs at $1809.50 and $1815.65 an ounce. Support is at $1792.50, followed by $1780.00 an ounce. If $1780.00 fails, gold could fall to $1750.00 an ounce.

I got the US Dollar direction very wrong yesterday, as US markets returned with their risk aversion hats on. That saw US yields move higher across the curve, ahead of some heavyweight auctions this week. Higher yields, and a cautious tone of equities, where recovery concerns prevailed, saw a flight to safety, pushing the US Dollar sharply higher. The dollar index leaping 0.35% to 92.52. The longevity of the US Dollar rally will now depend on whether yesterday just post-holiday blues, or about the start of deeper concerns regarding the US recovery. That makes the move higher by US yields overnight even stranger. With one eye on potential whipsaws, I will content myself to call 92.00 to 93.00 as the dollar index trading range for the rest of the week.

EUR/USD fell 0.25% to 1.1845 overnight, where it remains today. Although it failed at 1.1900 on Monday, I do not foresee the 1.1750/1.1800 region failing. A dovish taper by the ECB tomorrow should be bullish for the single currency. GBP/USD tumbled 0.37% to 1.3780, buffeted by Government tax increase announcements and a stronger greenback. GBP/USD closed below support at 1.3800 overnight, breaking through a support line at that level and its 50 and 200-day moving averages. (DMAs) Its situation looks more perilous than the Euro’s, and the charts suggest losses could extend to 1.3700 this week.

The souring of risk sentiment saw AUD/USD fall 0.70% to 0.7385, while NZD/USD fell by 0.50% to 0.7100. Both are unchanged in Asia and are sitting in short-term support zones. Further, US Dollar strength could extend losses to 0.7300 and 0.7000 in the near term, although I would prefer to see 0.7375 and 0.7080 comprehensively broken before giving up on the bullish outlook.

USD/CNY has edged higher to 6.4640 today after a neutral PBOC fixing. USD/CNY continues to give no insight or hints to the PBOC’s thinking on a daily basis, and although regional Asia FX retreated overnight, it did so only modestly. Most of the US Dollar strength being reflected in the G-10 space. The Asian FX solidity is a cautionary note for US Dollar bulls elsewhere now. Hinting that the US Dollar strength seen overnight in the G-10 space could be just a short-term sentiment swing.

We will have to wait for New York to arrive this evening to gain more clarity. That likely explains why the G-10 and regional currencies have hardly moved in Asia today. It seems that forex traders in the region agree with me and would prefer to wait and see.

New York returned from holiday in a sombre mood overnight, as the US Non-Farm Payrolls data heightened fears that the US recovery is running out of momentum. With the US debt ceiling and the passage giant infra-structure bill to come later in the month, those concerns may be well-founded. There are plenty of potential banana skins this month, including an FOMC meeting.

US markets rotated into the perceived safety of big-tech overnight, which pushed the S&P 500 and Dow Jones lower, while the Nasdaq held steady. The S&P 500 fell 0.34%, the Nasdaq finished just 0.07% higher, and the Dow Jones retreated by 0.76%, with growth and value taking a beating. US index futures have staged a modest comeback today, rising by around 0.10%.

In Asia, the uninspiring Wall Street performance and falling commodity prices are weighing on Asian markets. The exception being Japan and China, where stimulus hopes are alive and well and keeping the music playing. That sees the Nikkei 225 rising 0.70% today, even as the Kospi falls by 0.50%. In China, the Shanghai Composite is 0.10% higher, while the CSI 300 has risen by 0.30%, with the Hang Seng flat. China markets have given back most of their early gains, so it could be that the New York malaise is having a delayed impact after China has rallied impressively this week.

Singapore has retreated by 0.70%, with Taipei 0.30% lower. Kuala Lumpur has managed to book a 0.30% gain, but Jakarta has fallen by 0.25%. A negative New York lead and lower overnight commodity prices are weighing on Australian markets. The ASX 200 and All Ordinaries are 0.30% lower.

With sentiment shifting back and forth intra-day at the moment, the noise in Asia is unlikely to weigh on European markets, which I expect to open modestly higher this afternoon, after what was, despite the noise, just a modestly corrective US session.