In recent times, the strength of the United States dollar (USD) has come into question. The world's reserve currency has experienced a notable period of weakness, raising concerns and sparking discussions about the potential for this trend to continue. In this article, we will delve into the factors contributing to USD weakness and explore whether this downward trajectory is likely to persist in the near future.

The EURUSD Performance

EURUSD is about to create new highs.

EURUSD recently broke above the previous weekly timeframe high around 1.07848. This happened after the market created a lower low around 1.06336 and went on to create higher lows around 1.06650 and 1.07324. 

This price action provided signs of bullish strength which was confirmed by the break above 1.07848 and also developing a new trend to the upside. Traders are monitoring the market and anticipate a pushback to the bottom of the channel and a higher low to form before looking for trading opportunities to the upside.

The GBPUSD Performance 

GBPUSD is trading within a bullish channel.

GBPUSD recently broke above the previous support zone around 1.26610 and rallied +150 pips. The market usually pulls back to any broken zone for a retest before it continues further. Therefore, traders wouldn't want to buy around the current levels that the market is trading at. But rather wait for a retracement back to the previous resistance zone turned support zone before looking for trading opportunities to the upside with targets set at the top of the channel.

Read More: Traditional Trading to EA: What’s Next for FX/CFD?

The XAUUSD (GOLD) Performance 

GOLD is struggling to break below 1930.00. 

The price action on GOLD indicates that the market is trapped in a range between the resistance zone created around 1980.00 and the support zone around 1930.00 however still trading within the descending channel. Recently the market bounced aggressively from the support zone and rallied back to the top of the channel. 

There is a possible inverse head and shoulders pattern forming which could push prices back to the resistance zone if the market breaks above the channel and the neckline. According to this price action, traders are patiently waiting for GOLD to confirm the formation by creating a higher low and breaking above the channel before looking for trading opportunities.

Final Thoughts On Today’s Analysis 

Moreover, predicting the future direction of any currency is inherently challenging. The USD weakness that has been on the open recently may continue based on several fundamental factors. The Federal Reserve's monetary policy, global economic dynamics, trade imbalances, and geopolitical factors all contribute to the ongoing weakness of the USD.

However, it is essential to note that currency markets are highly complex and subject to numerous variables, making it difficult to predict with certainty. Investors and market participants should closely monitor these factors and seek professional advice when making financial decisions in the foreign exchange market.