The US dollar does not hold supports and loses against euro, pound, Canadian dollar and Australian dollar: USD forecast are bearish but moderately, possible corrections and recoveries. The drop in the greenback supports the rush of other currencies and gold, which flies above the psychological threshold of $ 2,000.
A few days ago I wrote that the dollar forecast indicated laterality around the lows, with some downside risks before possible corrections. And in fact on the days of Monday 3 and Tuesday 4 August the trend of the dollar confirmed these forecasts: the downtrend continues slowly but steadily, and the momentary corrections are immediately put behind. On the morning of August 5, EUR/USD hit 1.185 while GBP/USD went up to 1.313.
The dollar just doesn’t hold the supports. This is the consideration that every forex trader must make in this particular period. This time, however, the gold that exceeded $ 2000 an ounce for the first time in history has also dragged the dollar down. The reasons for this situation are many, but in fact the dollar, which in recent days seemed ready for a significant and interesting bullish correction, also observing the Dollar Index, weakened against the euro and the pound, and in part against the Canadian, Australian, New Zealand dollars.
USD forecast: gradual and continuous downtrend, with corrections
There would be a desire to a dollar pullback, this can be understood from the price action that brings the dollar down, but without the liveliness seen in recent weeks, without the momentum that had characterized the first part of the climb. And the feeling is that some corrections should still occur in the coming days and weeks ahead.
It would be quite surprising if the EUR/USD rose directly to 1.2500 or the GBP/USD to 1.3600, or if the USD/CAD dropped to 1.2800 with AUD/USD and NZD/USD jumping to 0.7500 and 0.7000 respectively: USD forecasts indicate that these levels are medium-term targets, however, but it should be achieved gradually.
Each movement must have its necessary counter-movement which then allows an adequate distribution of prices. On the other hand, if it goes up or down directly and without starlings, then the trend loses consistency in terms of volumes and these movements overturn vehemently, as happened in March with the excess of dollar strength then reversed with a V-movement that extended the correction turning it into an opposite trend.
The EUR/USD is above 1.1800, however still far from that 1.1912 seen on July 31, while GBP/USD approaches 1.3100 with the end of last month’s high at 1.3169. Technically, it seems an attempt to retest the previous highs to generate a double high that could act as reaching a top of a first bullish cycle, with corrections of at least 150-200 pips of consolidation, before a restart that could be in the autumn. But beware: US presidential elections are unlikely to occur with a dollar slump and market instability. But technically this could happen.
USD/CAD broke 1.3330 and now appears to be on the 1.3220 test before a significant pull back, as AUD/USD and NZD/USD could attack 0.7230 and 0.6720, previous highs and double top formation areas.