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Bullish USD Outlook Mired Post FOMC- JPY, GBP & Gold in Focus

Bullish USD Outlook Mired Post FOMC- JPY, GBP & Gold in Focus

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Talking Points


Chart Created Using FXCM Marketscope 2.0

Notes: The index rebounded off key support defined by the lower medina line parallels of the slope off the July lows. This region is further backed by the 11,854/88 region (bullish invalidation). Interim resistance stands at 12,149 with a breach there targeting the upper median-line parallel which comes in around 12,235 heading into the weekend. Note that the daily RSI signature has taken a hit & if we fail at 70 with price holding the highs, we could see this start to fizzle-out into next week.


Notes:USDJPY is trading within the confines of a well-defined median-line formation off the December low with yesterday’s sell-off charging a rebound off key support at the near-confluence of the former TL resistance & operative ML support (highlighted region ~119.40/60). We’ll continue to reserve this zone as our near-term bullish invalidation level with resistance seen higher at 121.43 & the 2015 high at 121.84. (Washout risk remains high below this level). Note that the daily momentum signature has struggled to hold above 60 and we will remain attentive to weakness sub-50 in the near-term. A break of this formation risks a drop into support at 118.15/20.


Notes:Sterling saw the second largest range relative to its daily ATR amongst the majors yesterday with a whopping 360% move. Although the rally stretched as high as 1.5164, on a close basis the trade did respect the 1.4950/90 key resistance zone (bearish invalidation level)- Note that former TL resistance off the July high converges on this zone which is defined by the January stretch low & the low-day close. Key support remains with the 1.618% extension of the decline off the July high at 1.4679 (dark-blue) with a break there targeting scalps into the ML confluence just below the 1.45-handle. That said, the short-side scalp bias is at risk while above this support level- watch momentum.

Gold Daily

Notes:The gold rebound is approaching the first targeting area of resistance post FOMC into 1181. Note that slight divergence into a resistance trigger break in momentum has kept the topside in focus with the weekly candle now shaping up to complete an outside weekly reversal if we close around these levels on Friday. Bottom line: the key 1150/37 support level we’ve been noting for the past few weeks has produced a reaction & near-term the focus is on the recovery off this mark. Looking for a pullback here but short-scalps remains at risk while above 1150 (bullish invalidation) with a breach through 1181 confirming a near-term reversal pattern in bullion targeting 1195/97.

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

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