- The dollar gapped higher at the open against a basket of six major rivals due to a sharp ease in risk aversion, potentially targeting H1-period resistances on the day.
- The gold gapped lower at 1334.45, off almost $12 comparing to the closing price of last Friday. The yellow metal is expected to consolidate on a day of light economic calendar.
The dollar index rallied in a choppy market last Friday (8 September). This morning, the index gapped higher at the open towards circa lows of 29 August on eased risk aversion, responding to the fact that North Korea did not deliver its mentioned plan to conduct another test of its nuclear and missile program on the independence celebration day over the weekend. The dollar staged a recovery against the Japanese yen in response.
Instead of moving down sharply after breaking below lows of 29 August, the dollar index rallied to test its diverging long term moving averages resistance which showed strong bearish momentum and could offer short-term resistance on 1 hour chart. In the meantime, its short term moving averages turned higher and reached its long term moving averages after convergence. It will be interesting to watch whether or not the index could see consolidation below its H1-period EMA60 resistance ahead of Monday’s New York session.
（DXY H1 chart）
As to non-U.S. currencies, the euro fell back slightly to its supports at H1-period EMA60 in the short term after reacting off resistances last Friday. Whether or not the single currency could hold the supports on the day will be important to observe. The sterling extended rallies towards its highs of 3 August. However, it could stage a short-term corrective decline due to strength in the dollar in this morning trading. The Aussie dollar reversed lower and broke down below its supports at H1-period EMA60 this morning, with downside support at H4-period EMA30.
（GBP/USD daily chart）
Let’s take a look at precious metals now. The gold started to move down in New York session last Friday. It opened lower and declined by near $12 due to sharp eased risk aversion sentiment this morning. The yellow metal lost ground to test its trend supports on 1 hour chart. Its short term moving averages have already turned lower, however, still stayed above its long term moving averages in early Asian session. The price is expected to find some short-term supports on Monday and whether or not there will be some crossovers between its short term and long term moving averages going forward could be important to observe.
（Gold H4 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.