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Talking Points:

It has been a drama filled week for US Dollar traders. This week’s trading has ultimately been driven by a 0.25% rate hike from the Fed, and a promise for up to 3 more hikes may continue to drive the US Dollar into 2017. Technically, the short term trend for the US Dollar Index (Ticker:DXY) remains pointed higher with prices again trading back above the 10 day EMA (Exponential Moving Average). This line is found at 101.80, and will remain as a value of short term support in the final weeks of 2016 trading.

US Dollar Daily Chart and Averages

US Dollar Rally Continues to End Trading Week

(Created Using TradingView Charts)

US Dollar pairs to watch next week include the USD/JPY, USD/CAD, and NZD/USD. The USD/JPY has lead the way on US Dollar strength, and has rallied as much as 393 for this week’s trading. Also commodity currencies have taken a hit, with many pairs turning on this weeks Fed news. The USD/CAD has been put in focus for its daily bounce off of the 200 day SMA (simple moving average). This strong bounce has signaled a potential price reversal back in the direction of the daily trend. Now the pair remains above its short term 10 period EMA, also signaling that short term momentum is turning bullish.

US Dollar Daily Chart and Averages

US Dollar Rally Continues to End Trading Week

(Created Using TradingView Charts)

In the event that the current US Dollar trend turns, traders may continue to look for classical technical signals. This includes indicator divergence, coupled with lower lows, and a move below the 10 period EMA for the DXY. In this alternative scenario, traders may adjust their short term perspective on the market but should always remain aware of the still ongoing US Dollar primary trend.

See the above video for a full technical review of the DXY Index, EUR/USD, USD/JPY, USD/CAD and More!

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--- Written by Walker, Analyst for DailyFX.com

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