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3 USD Trades to Watch Ahead of FOMC Minutes

3 USD Trades to Watch Ahead of FOMC Minutes

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- USDJPY is bellwether of market; watch 108.00/25.

- AUDUSD, EURUSD respect 13-EMAs, post-ECB/NFP swing highs.

- October Forex Seasonality Foretells End of Seasonal USD Weakness

The US Dollar has retraced all of its post-NFP gains from Friday. What does this mean for the rally? It may not mean much at all if last week's highs can't be punched through in AUDUSD and EURUSD; the resistance is established as both the apex of price after major event risk (ECB, NFPs) and the opening range for the month.

Our focus on the USD-complex is split into two camps. First, USDJPY stands on its own, as the bellwether of the greenback rally since mid-August. The weakening technical picture, buttressed by the broadening wedge at highs, would be accentuated on a move below ¥108.00/25 this week. USDJPY may be due for a pullback after the market achieved our early-September price target of ¥110.

The other technical camp the US Dollar is in is represented by AUDUSD and EURUSD, two momentum/breakout trades for the past four weeks. Both of these pairs have respected their daily 13-EMAs during the course of their respective downtrends, and already yesterday and today we've seen price rally to those levels and turn back. The USDOLLAR Index is following a similar pattern.

See the video above for technical considerations and the ranges we're watching in AUDUSD, EURUSD, and USDJPY ahead of the FOMC minutes release tomorrow.

Read more: Setting USD Expectations for the Week Ahead in EUR/USD, USD/JPY

--- Written by Christopher Vecchio, Currency Strategist

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