US Dollar Bounces as EUR/USD Tests Key Resistance

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Talking Points:

– The US Dollar is bouncing from the August lows that printed with yesterday’s price action, and this comes together with a draw back transfer in EUR/USD from a key space of resistance. This units the stage for 2 doable outcomes as setups exist for each EUR/USD bulls and bears. For bullish EUR/USD situations, merchants can look to shorter-term themes with doable higher-low help at prior short-term resistance. On the bearish aspect of the pair, merchants can take a look at the longer-term development after an oversold theme bounced as much as a key space of chart resistance, taken from the July highs.

– The the rest of this week’s economic calendar has objects of curiosity out of Europe, Canada and the US. Tomorrow brings German inflation and unemployment numbers to go together with Canadian GDP and the newest print of the Fed’s most well-liked inflation gauge of PCE. Friday closes the week with inflation numbers out of the Euro-Zone, and it will probably maintain the only foreign money on the transfer as we shut out what’s turn out to be a really energetic month of August.

– DailyFX Forecasts on quite a lot of currencies such as the US Dollar or the Euro can be found from the DailyFX Trading Guides page. If you’re trying to enhance your buying and selling method, take a look at Traits of Successful Traders. And for those who’re on the lookout for an introductory primer to the Forex market, take a look at our New to FX Guide.

Do you wish to see how retail merchants are presently buying and selling the US Dollar? Check out our IG Client Sentiment Indicator.

US Dollar Bounces as EUR/USD Drops From Resistance

The bullish two-week jump in EUR/USD has started to pullback after setting a contemporary August excessive yesterday. This comes on the heels of one other two week-trend that started the month by pushing the only foreign money decrease, largely on the basis of fears around the still-developing situation in Turkey. As Turkish markets got here again on-line after being on vacation final week, Lira weak point has started to point out once more and the Euro has started to offer again a few of the prior bullish transfer. This is coupled with one other Euro-negative theme of volatility in Italian politics, as a information report earlier this morning signifies that the Italian authorities goes to request that the ECB do one other spherical of QE to assist help Italian bond costs. While that appears an unlikely state of affairs – it does communicate to the concern that market contributors confirmed within the month of May as the present administration was taking seat in Rome.

In response, EUR/USD is dropping from the second resistance area we looked at coming into this week. This runs from the Fibonacci level of 1.1709 as much as the psychological degree of 1.1750, comprising a zone of resistance that held the highs within the pair by way of the second half of July.

EUR/USD

The large query at this level is one in every of directional continuation, as a case may be made on both aspect of EUR/USD in the intervening time. On the lengthy aspect, merchants can search for help to point out at prior resistance earlier than trying to commerce the transfer increased. This can be the shorter-term method, utilizing four-hour and hourly charts to plot for higher-low help in a transfer of bullish continuation. Focus stays on resistance as much as 1.1750, as a topside break will additional open the door to themes of longer-term bullish continuation within the pair.

EUR/USD Four-Hour Price Chart: Support Potential Around Prior Resistance

Chart ready by James Stanley

And on the short-side of EUR/USD, the dealer can be on the lookout for the longer-term development to stay in play after costs within the pair examined a lower-high ingredient of resistance at a key space on the chart. This is the aspect that we shared in this week’s FX Setups, and this stays a workable theme till this zone of resistance is taken-out or examined by way of.

EUR/USD Daily Price Chart: Hold of Resistance, Re-Emergence of Bears Keeps Door Open for Longer-Term Bearish Continuation

eurusd eur/usd daily price chart

Chart ready by James Stanley

US Dollar Bounce From Support Under Review

The US Dollar has been moderately risky, significantly for summer season price action as the four-month bullish development within the pair got here beneath hearth over the previous two weeks. Perhaps most attention-grabbing, support seemingly could not hold the declines, as sellers continued to push by way of a lot of key ranges within the second-half of August. As we talked about in yesterday’s webinar, that USD-weakness appeared to be unevenly distributed, exhibiting fairly prominently towards the Euro whereas different pairs retained the longer-term theme of US Dollar strength.

At this level, the US Dollar has bounced up prior help, and a little bit of promoting strain has started to point out. This can maintain the door open for bearish short-term themes within the US Dollar, and this may very well be sought out by way of the bullish setup investigated above in EUR/USD. For people who want to get on the aspect of long-USD, a break again above the 95.00 degree may make these prospects look significantly extra engaging.

US Dollar Hourly Price Chart: Bounce From August Lows Testing Resistance at Prior Support

us dollar usd hourly price chart

Chart ready by James Stanley

US Dollar – 95.00 A Key Level for Today

On the Daily Chart of the US Dollar, yesterday produced a spinning prime formation, which is sort of a doji however with a barely wider physique. Like a doji, this formation alerts indecision and can usually present close to the highest or backside of a transfer. Given the strength that’s proven up to now as we speak, this produces a possible morning star formation ought to as we speak’s candle shut above the 95.00 degree, which might produce the dual-pronged good thing about finishing the formation whereas additionally mounting back-above a key space on the chart. This may make the theme of bullish continuation within the US Dollar look extra engaging, thereby chatting with the bearish EUR/USD state of affairs checked out above.

US Dollar Daily Price Chart: Bullish Morning Star Potential With Close Over 95.00

us dollar usd daily price chart

Chart ready by James Stanley

GBP/USD Deeper into the Wedge

GBP/USD has finally found some element of support after the four-month bearish trend pushed prices to fresh lows. While GBP/USD topped out on the 78.6% Fibonacci retracement of the Brexit transfer in April, up to now it’s been the 23.6% retracement of that very same transfer that’s helped to quell the declines.

GBP/USD Weekly Price Chart: Fibonacci Support Holds the Lows, For Now

gbpusd gbp/usd weekly price chart

Chart ready by James Stanley

Since that help got here into play two weeks ago, prices have been working higher, and the trend-line that’s constructed beneath worth motion may be coupled with a longer-term bearish trend-line to provide a symmetrical wedge formation; which signifies digestion after a very large directional transfer. As mentioned in our FX Setups for The Week of August 27th, we have been taking a look at this setup from a bearish gentle, on the lookout for costs to carry at resistance earlier than staging a down-side break of trend-line help.

GBP/USD Four-Hour Price Chart: Testing Wedge Support After Hold of Lower-High Resistance

gbpusd gbp/usd four hour price chart

Chart ready by James Stanley

AUD/USD Backs Down – .7200 Re-Test in Store?

Last week we looked at counter-trend plays in AUD/USD, largely on the premise of the pair operating into an enormous space of confluent Fibonacci help. This is identical space that rotated two separate bearish advances in 2016, and hadn’t come back into play since.

But final week’s bullish advance stopped wanting a trend-line re-test, and over the previous week we’ve seen lower-high resistance construct: We checked out this setup in yesterday’s webinar as an attention-grabbing degree of resistance was holding the highs across the degree of .7364. Since then, we’ve seen response and costs are actually heading back-down, giving the looks of a doable re-test of the .7205 Fibonacci degree on the charts.

AUD/USD Daily Price Chart

audusd aud/usd daily price chart

Chart ready by James Stanley

To learn extra:

Are you on the lookout for longer-term evaluation on the U.S. Dollar? Our DailyFX Forecasts for Q3 have a piece for every main foreign money, and we additionally supply a plethora of assets on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders also can keep up with near-term positioning by way of our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX presents a plethora of instruments, indicators and assets to assist merchants. For these on the lookout for buying and selling concepts, our IG Client Sentiment reveals the positioning of retail merchants with precise reside trades and positions. Our trading guides convey our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX group. And for those who’re on the lookout for real-time evaluation, our DailyFX Webinars supply quite a few classes every week in which you’ll see how and why we’re taking a look at what we’re taking a look at.

If you’re on the lookout for academic info, our New to FX guide is there to assist new(er) merchants whereas our Traits of Successful Traders research is constructed to assist sharpen the talent set by specializing in threat and commerce administration.

— Written by James Stanley, Strategist for DailyFX.com

Contact and observe James on Twitter: @JStanleyFX



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