- The United States Dollar broke below its short-term trading range after Moody’s Investors Service issued warning on United States debt limit on Tuesday.
- Gold hit fresh yearly high and reached 1344.2. With bearish divergence in its MACD indicator both on 1 hour and 4 hour chart, the yellow metal could face short-term corrective decline risks although its uptrend remains intact for now.
The greenback staged expected decline after consolidation against a basket of six major rivals to 61.8% Fibonacci level of prior rally at 92.19 on Tuesday (5 September). Moody’s Investors Service said on Tuesday it would strip the United States of its top-notch rating if a default such as a missed debt payment were to happen. Thus, dollar slumped while gold rose in response. Keep an eye on the buck and watch if it could decline further towards 29 August lows amid light economic calendar ahead.
The dollar index (DXY) slipped slightly Tuesday. Facing its upside resistance at still-descending long term moving averages which were in bearish order, its short term moving averages had to go down again in correct bearish order after convergence on its 4 hour chart. It will be interesting to watch whether or not its long term moving averages could continue to suppress its short term moving averages.
（DXY H4 chart）
As to non-U.S. currencies, the euro closed slightly higher in a choppy market with limited upside momentum. The single currency is expected to maintain consolidation mode until the ECB monetary releases policy decision (see its 4 hour chart). The pound rallied sharply above 1.3 handle to a near 3-week fresh high after finding support at H4-period EMA60. Investors should be aware of short-term corrective decline risks. The Aussie dollar bounced back towards prior swing highs. However, the commodity currency could potentially reacting off the upside modestly strong resistances in the short term.
（GBP/USD H4 chart）
Let’s take a look at precious metals now. The gold hit a fresh high and reached as high as 1344.2 with bearish divergence showing both in 1 hour and 4 hour chart in its MACD indicator. Its short term moving averages are about to converge while long term moving averages maintain up momentum on its 1 hour chart. Whether or not the yellow metal could retreat and test its downside supports at long term moving averages on the day is important to observe.
（Gold H1 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.