News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/ZWwGB8J6I7
  • Ethereum is starting to outperform Bitcoin again ahead of ETH’s latest upgrade, while Binance continues to pare back business areas amid ongoing regulatory pressure. Get your crypto forecast from @nickcawley1 here: https://t.co/ul4TIfI9bv https://t.co/Ht5Mr0uu91
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9Flsqcxo9 https://t.co/m06h4hjwVP
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/LcfxFxFrTY
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/rJznrXkcYz https://t.co/UgYlEILK5n
  • Emotions are often a key driving force behind FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here: https://t.co/eILWbFgHRE https://t.co/BXp2z6E0Kl
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/xGuTYZqYwh
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/EvRHfRQLgk
  • The Australian Dollar remains vulnerable in the week ahead, eyeing risks such as a dovish RBA, surging Covid cases and recent crackdowns by Beijing. Might US NFPs offer some relief to AUD/USD? Get your weekly AUD forecast from @ddubrovskyFX here: https://t.co/LQzQymM3ND https://t.co/XOCJl3vbu1
  • $AUDNZD closed at its lowest since December 2020 Prices pierced the 1.0541 - 1.0564 support zone, exposing the November low at 1.0418 A confirmatory downside close under support next week may open the door to further losses #AUD #RBA https://t.co/mybbgPHNX4
Strong & Weak: USDOLLAR Breaks Significant Resistance

Strong & Weak: USDOLLAR Breaks Significant Resistance

Jeremy Wagner, CEWA-M, Head of Education

Talking Points:

-2 fundamental surprises jolted FX markets awake

-USDOLLAR firmly in the top spot as the strongest currency

-Buy USDOLLAR Currency Basket

During this past week, market participants were provided with a couple of surprises. First, the European Central Bank cut their target benchmark rate 25 basis points to 0.25%. This shocked the Euro towards broad based weakness as investors shun a lower yielding currency.

Secondly, the US jobs report on Friday was a positive surprise and above expectations. This fueled speculation that the Federal Reserve would taper their Quantitative Easing purchases sooner rather than later.

As a result, the Euro to dollar exchange rate was under heavy pressure towards the end of the week. That pressure caused the exchange rate to crack below an upward sloping trend line that has been in place since July 2013. (See EUR-USD chart below)

The USDOLLAR gained not just against the Euro. The Greenback is breaking through a significant resistance level which is the main reason why it shows up as the strongest currency in our strong and weak analysis.

Forex Strategy: Matching Strong versus Weak

Currency

Up Arrows

Down Arrows

Change From Last Report

USD

7

0

No Change

GBP

6

1

Higher 2 rankings

NZD

4

2

Higher 4 rankings

CAD

3

3

Higher 3 rankings

EUR

1

3

Down 3 rankings

JPY

1

4

No Change

AUD

0

4

Down 5 rankings

CHF

0

5

Down 4 rankings

Chart created by DailyFX EDU Robert Warensjo

When comparing the price of the exchange rates relative to their 200 period Simple Moving Average, the Greenback changed trend the most and is now considered the strongest currency according to the Strong & Weak analysis.

Forex Education: USDOLLAR in a Trend Channel

USDOLLAR_Breaks_Significant_Resistance_body_Picture_2.png, Strong & Weak: USDOLLAR Breaks Significant Resistance

(Created using FXCM’s Marketscope 2.0 charts)

In our last report, we identified a significant resistance level in the USDOLLAR at 10,575.

Due to the confluence of resistance near 10,575, there should be a reaction at that level. If the value of the USD were to strengthen above the 10,575 strong resistance, then that would likely confirm a medium to longer term bull market is kicking off.

USDOLLAR Finds Strength after FOMC” November 1, 2013

We did get that reaction on November 4 as prices traded up to 10,565. Prices were immediately rejected as they met resistance.

Last Thursday, prices re-tested 10,575 and were rejected again. However, after this 2nd rejection finished selling, its low ended up higher than the first. So on Friday November 8, when a 3rd retest of 10,575 resistance was made, prices started to break higher through it.

As a result of several technical patterns, the Greenback appears poised to move towards a medium term bull run. Therefore, begin to position towards USD strength. Now, where do you enter?

Forex Education: EUR-USD Partial Retracement?

USDOLLAR_Breaks_Significant_Resistance_body_Picture_1.png, Strong & Weak: USDOLLAR Breaks Significant Resistance

(Created using FXCM’s Marketscope 2.0 charts)

The Euro to USD exchange rate can offer some insight. After the exchange rate sold off hard due to the two surprise news releases last week, it is likely we’ll see a consolidation higher prior to resuming the bear trend. Using Fibonacci retracement levels and trend lines look for the EURUSD to drift higher towards 1.3480-1.3560. If prices are successful in reaching those levels, then we can look to add to our US Dollar buy trade from November 1.

(To learn more about timing trades with the Fibonacci retracement tool, enroll for this free Trading with Fibonacci course. In it, we teach how to apply the Fibonacci tool to the chart and how to time entries. The course will take about 15 minutes to complete.)

Executing the Trade

Since we anticipate the Greenback to see a broad based rally we will take a diversified approach and buy the USDOLLAR against a basket of currencies.

We recommend risking less than 5% on all open trades. As a result, risk less than 1-2% on this basket so you have additional capacity to take on other trades.

Good luck with your trading!

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education

Follow me on Twitter at @JWagnerFXTrader.To be added to Jeremy’s e-mail distribution list, click HERE and select SUBSCRIBE then enter in your email information.

See Jeremy’s recent articles at his DailyFX Forex Educators Bio Page.

Want to keep on top of the Dollar’s move and what fundamental news is pushing it? Join DailyFX on Demand where you can receive real time analysis of your trading ideas, real time SSI, and bank research of how funds are flowing. FXCM clients receive a discount.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES