- The US dollar has been absolutely hammered against the Czech koruna during the trading session on Monday, as we have fallen rather significantly and rather quickly due to concerns about inflation in America.
- Furthermore, we have had a major move in technical analysis, so that of course is something that we need to pay close attention to as well.
Technical Analysis
The United States dollar is lost over 1% against the Czech koruna, which of course is a rather big move considering that it is not a widely traded pair. It’s worth noting that the 50-Day EMA has offered resistance, right along with the 38.2% Fibonacci retracement level. We have broken below there, slicing through the 200-Day EMA it like it wasn’t even there, and now it looks like we are ready to drop toward the 22.50 koruna region, which was the latest swing low.
At this point, it looks like the trend is most certainly to the downside, and if we get the so-called “death cross”, when the 50-Day EMA breaks down below the 200-Day Exponential Moving Average indicator, longer-term traders will probably start paying attention to the downside as well. Either way, keep in mind that this is a market that sees a lot of volatility and choppiness, but it does tend to have huge trends form that can be followed.
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The Consumer Price Index in the United States came out 0.1% less than anticipated, and therefore people have sold the US dollar suggesting that perhaps inflation is starting to tame, and that could give the Federal Reserve the green light to start cutting sooner rather than later. At this point in time, there is a slightly higher interest rate in the United States but the difference between the United States and the Czech Republic is somewhat negligible, at least as far as currency trading is concerned.
Ultimately, it is worth paying close attention to the 22.50 level, because if we were to break down below there, the market is likely to continue to go much lower, perhaps down to the 22 level. On the other hand, if we turn around and rally at this point in time, we will probably see the 23 koruna level offer quite a bit of a short-term ceiling and barrier in the market.
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