- DailyFX Quarterly Forecasts have been updated for Q2, and are available directly from the following link: DailyFX Trading Guides, Q2 Forecasts.
- For trading ideas, please check out our Trading Guides. And if you’re looking for something more interactive in nature, please check out our DailyFX Live webinars.
Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.
US Dollar Pullback Potential Ahead of June FOMC (June 12-13)
Last week saw a doji print in the US Dollar as the bullish trend that started in mid-April finally posed some element of pullback. A key driver for the move appeared to be softening US rate expectations as political risk showed-up in Europe again; and last week’s NFP report was, all-in-all, pretty healthy across the board. Nonetheless, the US Dollar has opened this week by moving down to a fresh near-term low, and this highlights the potential for a deeper move of weakness in the currency.
This has helped the long AUD/USD and NZD/USD setups that we’ve been following on the short-side of the Dollar, and as we move deeper into the month of June, those pairs retain the prospect of bullish continuation. Below, we look at three setups designed for this week around the US Dollar, with one setup looking for a return of USD-strength and two setups looking for a deeper drop of USD-weakness.
AUD/USD – Bullish, Looking for Topside Continuation Around .7600
This was one of our preferred ways of looking for USD-weakness last week, and despite the fact that the Dollar held its own support, Aussie strength started to show a bit more prominently, helping the pair to firm-up to a fresh monthly high, taking out our first target in the process. At this point, the danger is buying a short-term overbought scenario, and with RBA on the docket for later tonight, the prospect of higher-low support grows a bit more attractive.
The prior swing-high around .7600 can be usable for this purpose, as this prior resistance has yet to show any element of support in this topside move. A pullback to support in the zone that runs from .7590-.7605 opens the door for bullish strategies, with stops investigated below the psychological level of .7500, with initial targets set to .7725.
AUD/USD Four-Hour Chart: Higher-Low Support Potential .7590-.7605
Chart prepared by James Stanley
Bullish NZD/USD on Continued Range-Fill Potential
Also on the side of USD-weakness, we’ve been following bullish NZD/USD scenarios. The backdrop for this is supported by a multi-year range in NZD/USD, and we had looked at the short-side of the pair in mid-April just ahead of the oncoming USD-strength. The bearish side of that range filled-in rather quickly, and last week we looked at flipping the script and taking the pair back-up to resistance.
So far this week, prices have posed a break back-above the key psychological level of .7000, and this keeps the door open for bullish continuation up towards that area of longer-term resistance.
NZD/USD Weekly Chart: Multi-Year Range Remains in-Effect
Chart prepared by James Stanley
For shorter-term entry protocol, that psychological level of .7000 can be usable. This area had helped to elicit resistance last week but, as of yet, hasn’t shown much for higher-low support. This similarly can be used for bullish continuation scenarios, looking to play pullbacks to support at prior resistance in the effort of topside continuation. This could allow for stops below the prior swing-low around .6950, and initial targets set to .7100, followed by a secondary target at the beginning of that longer-term resistance zone at .7200.
NZD/USD Four-Hour Chart: Bullish Continuation Potential
Chart prepared by James Stanley
GBP/USD Bearish Continuation Potential
Last week finally saw some element of support build-in to GBP/USD. We looked into this setup last Monday, remarking that the Cable Collapse Stalled at Six-Month Lows, and after a bit of bearish drive, prices have pulled-back towards the zone we were looking at for resistance around the 1.3400-area. This opens the door for bearish continuation strategies, with stops set above the 1.3450 level, and initial targets directed to the bottom of the support zone at 1.3269. Stops can be adjusted to break-even at that point, with secondary targets directed to last week’s swing-low of 1.3200.
GBP/USD Four-Hour Chart: Bearish Continuation Potential as Price Stops Short of Resistance
Chart prepared by James Stanley
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.
Forex Trading Resources
DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.
If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
