Dollar Downtrend Continues: When Might an Upward Correction Start?

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The end of last week was quite unfavourable for the US dollar. Following the Jackson Hole symposium, where Jerome Powell confirmed the Fed’s readiness to start lowering the base interest rate, the dollar sharply declined across the board. The USD/CAD pair dropped below 1.3600, GBP/USD reached new 2023 highs at 1.3140, and EUR/USD buyers managed to test the key resistance at 1.1200. The downward trend has continued into the start of this week. Under what conditions might this downtrend slow down, and at what levels could a rebound be expected?

USD/CAD

Sellers of the USD/CAD pair successfully broke through the key 1.3600-1.3580 range that had been holding the price in the first half of this year. The break of this support could pave the way for further price decline and a test of 1.3400-1.3350. Near these levels, a slowdown in the downward movement could be expected, particularly if the news backdrop is favourable. The beginning of an upward correction could lead to a price return to the 1.3600-1.3500 range. Technical analysis of the USD/CAD pair indicates the potential for further decline, as higher timeframes show a strong downward impulse, with no correction patterns yet forming.

Key events to watch in the upcoming trading sessions:

  • Today at 14:00 (GMT +3:00): US Mortgage Market Index release
  • Today at 17:30 (GMT +3:00): US Crude Oil Inventories release
  • Tomorrow at 15:30 (GMT +3:00): Canada Current Account data release

Read analytical USD/CAD price forecasts for 2024 and beyond.

GBP/USD

Sterling buyers have met all the targets mentioned in the previous analysis. The GBP/USD pair not only reached new highs but also strengthened confidently above 1.3200. On higher timeframes, a very strong upward impulse is visible, and if the uptrend continues, the target for buyers will be the 1.3470-1.3400 range. If the price falls below 1.3200, a downward retracement towards 1.3140-1.3100 may begin.

Events that could impact GBP/USD price action:

  • Today at 15:15 (GMT +3:00): Speech by Bank of England Monetary Policy Committee member Catherine Mann
  • Tomorrow at 09:00 (GMT +3:00): UK Vehicle Registration data for July release