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Dollar Plunges As China Devalues Yuan For Second Day - Capital Street FX
Dollar Plunges As China Devalues Yuan For Second Day
China devalued the Yuan for second day in-a-row, sending the American dollar sharply lower across the board, whilst stocks nose-dived and commodities also fell. Oil and Gold however, bounced, this last due to its safe-haven status.
In the EU Industrial Production in June resulted in a 0.4% drop monthly basis, whilst the year-on-year reading gained 1.2% against expectations of a 1.5% advance.
In the US, the number of job openings reached 5.2 million in June, according to the US Bureau of Labor Statistics, slightly below market’s expectations, whilst FED’s Dudley said that the hopes they can lift rates soon, but avoid to comment on a certain time.
The EUR/USD surged to a fresh 5-weeh high of 1.1213 in the American afternoon, but the pair retreated some from the mentioned daily high, ending the day, however, with strong gains, and despite being extremely overbought in the short term, the 1 hour chart is far from suggesting a reversal, as the price remains well above a bullish 20 SMA, whilst the technical indicators have barely corrected extreme readings and the RSI indicator is now turning flat around 69.
In the 4 hours chart the technical indicators are also showing signs of upward exhaustion in extreme overbought territory, not yet suggesting a downward correction move.
As long as the price holds above 1.1120, the risk will remain towards the upside, with scope to extend its gains on a break above 1.1240, a strong static resistance level.