On Wednesday, the US Dollar (USD) still had more extreme downside. It held on to its multi-day bearish trend, further tugged down by increased geopolitical fears and market expectation for next week’s economic figures. The US Dollar Index (DXY) dropped to new five-week lows, falling under the key support level of 99.00. The Greenback is under heavy selling pressure on all major currency pairs. This concerning downward trend is not an isolated event, pointing to a widespread downturn in performance.
In the FX markets, USD/JPY posted a big move lower, as further strength was limited at the 156.00 barrier. At the same time, GBP/USD climbed above the 1.3300 level for a short period of time, testing its major 200-day simple moving average (SMA). Australian Dollar (AUD) surges Higher AUD gained more than 2% overnight, climbing above/near important psychological 0.6600 level. This surge indicates robust demand, despite the ongoing headwinds facing the USD.
Gold prices jumped over the $4,200 threshold per troy ounce. This surge reflects the market’s evolving flight to safety as the economy undulates between various states of uncertainty. EUR/USD exploded to new two-month highs, nearly breaking the key 1.1680 resistance. This movement has refocused efforts back on breaking the psychological barrier at 1.1700. Silver skyrocketed to an all-time high of nearly $59.00 per ounce. This uptick is a blatant indication of pent-up investor demand for precious metals, especially given the current climate uncertainty.
In sympathy, crude oil prices jumped as well, with West Texas Intermediate (WTI) almost at the psychologically important $60.00 figure/barrel. Now oil prices are soaring again on concerns about a possible supply disruption. Geopolitical tensions, especially Russia’s war with Ukraine, are roiling global energy markets, stoking these fears even more.
Market participants wait in nervous anticipation of every key economic indicator. Specifically, they are looking out for the HCOB Construction Purchasing Managers’ Index (PMI) in Germany and the Eurozone, as well as bloc-wide Retail Sales figures. Japan is set to release its weekly Foreign Bond Investment figures. Taken together, these numbers have the potential to tell us important things about investor sentiment and where capital is flowing.
Geopolitical concerns have returned to the fore. This recent resurfacing is likely due to the lack of any substantive news about possible reconciliation between Russia and Ukraine in this continuing war. Increasingly prevalent uncertainty has only intensified pressures on the USD and added malice behind its recent bearish performance.