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FX Setups for the Week of February 25, 2019

- DailyFX Quarterly Forecasts are available directly from the following link: DailyFX Trading Guides, Q1 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.

- If you’d like more color around any of the setups below, join in our live DailyFX webinars each week, set for Tuesday and Thursday at 1PM Eastern Time. You can sign up for each of those sessions from the below link:

Tuesday: Tuesday, 1PM ET

Thursday: Thursday 1PM ET

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

US Dollar Softens Post-FOMC Advance

Next week sees the spotlight move back on to the US Dollar: On Tuesday and Wednesday, FOMC Chair Jerome Powell will head to Capitol Hill for the Fed’s twice-annual Humphrey Hawkins testimony. After delivering prepared statements, Chair Powell will take questions from each arm of Congress: The Senate Finance Committee is on Tuesday and the day after he speaks with the House Financial Services Committee. The Q&A nature of the event can make it particularly interesting, as the Chair will be questioned on a variety of topics that may drive volatility through markets.

In US Dollar price action, the currency spent much of this week tempering prior February gains. The currency sparked a bullish trend after the January FOMC rate decision, and that theme saw the US Dollar run into fresh 2019 highs last Friday. The pullback from that high lasted into this Wednesday, around the release of FOMC minutes from that January rate decision. That topside bounce ran into resistance again this morning, keeping DXY at a familiar support level of 96.47, which is the 23.6% Fibonacci retracement of the 2011-2017 major move in the currency.

Below, I look at setups on each side of the US Dollar designed for next week’s price action.

US Dollar Eight-Hour Price Chart

us dollar usd eight hour price chart

Chart prepared by James Stanley

Bullish USDJPY for Top-Side US Dollar Biases

Despite the US Dollar’s pullback this week, USDJPY spent most of the period adhering to a consistent, albeit slow, topside move. As discussed earlier this morning, USDJPY re-engaged with the Fibonacci level at 110.86 to find resistance on Tuesday, Wednesday and Friday, with buyers failing to push through each time. But sellers haven’t exactly been able to grab control of matters either, as prices continued to respect the 110.30 support level that was tested last week.

At this point, USDJPY can remain as one of the more attractive long-USD options, particularly given this week’s outlay in which the pair seemed to be at least somewhat immune to the Dollar’s pullback. Should USD-strength fire around next week’s Humphrey Hawkins testimony, USDJPY remains an interesting spot as a strong Dollar can be matched up with what’s been a weak Japanese Yen.

For timing, there could be a couple of options here for traders: A topside breakout from the 111.13 high that was set last week could open the door for a test of the next Fibonacci level in that sequence around 112.34. Alternatively, if bears are able to make more of a southbound push, the prior area of resistance looked at earlier this month could be re-incorporated as potential support; and that runs from 109.67-110.00.

USDJPY Four-Hour Price Chart

usdjpy usd/jpy four hour price chart

Chart prepared by James Stanley

Bearish USDCHF for Short-Side US Dollar Biases

On the other side of the US Dollar, USDCHF remains of interest as the pair pushed back-down to the parity level this week. As looked at last week, resistance at the 1.0096 level has thus far held the upward advance in the pair; and while prices began to turn-lower last Thursday, that move has continued through this week for a re-test of the vaulted parity figure. This could keep the pair as interesting for bearish USD strategies, targeting a re-test of the .9902 Fibonacci level followed by deeper target potential around .9850 and .9766.

USDCHF Four-Hour Price Chart

usdchf usd/chf four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts 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