- The greenback slipped while the safe havens Japanese yen and the gold rose in early Asian session amid increasing risk aversion as Trump commented over North Korea on twitter again.
- Wall Street was mixed on Monday, with Dow Jones whipsawed at its highs while S&P 500 and Nasdaq modestly retraced. We should be aware of another corrective decline in the U.S. stocks.
The dollar dropped against a basket of six major currencies in a choppy session on Monday 9 October. The buck dived this morning as U.S. President Donald Trump tweeted again on geopolitical issues that triggered concerns among market participants and ignited risk aversion. The dollar could potentially move down to test H4-period EMA60 support while the safe havens Japanese yen and gold rose sharply. Whether or not the risk aversion sentiment will continue to spill over on the day will be important to observe.
The dollar index (DXY) slumped quickly this morning on the back of aforementioned event after tentatively finding support at H4-period EMA30. The index’s short-term decline continued on the 4 hour chart. Its short term moving averages descended further into its long term moving averages which remained divergent with bullish bias, though tended to flatten. Downside support around EMA60 is worth watching.
（DXY H4 chart）
As to non-U.S. currencies, the euro broke above its H4-periode EMA60 resistance, however, it still to be seen whether or not the single currency could sustain its rally. The British pound recent sell-offs eased in some degree and rallied close to the 23.6% of the prior downleg, which confluence with daily EMA30 resistance (around 1.3175), along with other currencies on Monday, however, to the larger extent. The Aussie dollar bounced back this morning after the overall decline momentum waned through consolidation at its lows. The commodity currency could move up and test trend resistance on the 4 hour chart.
（AUD/USD H4 chart）
As far as precious metals were concerned, the gold resumed the uptrend in late New York session after consolidation of its upleg. The yellow metal rose sharply this morning thanks to Trump. It could rally further above circa 1287 resistance, targeting 1290-1293 area. Keep an eye on the change in risk sentiment on the day.
（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.