Range in USDOLLAR Index Offers Opportunities on Both Sides This Week
- EURUSD may have shifted into a symmetrical triangle.
- GBPUSD, USDJPY in similar consolidations/ascending triangles.
Event risk this week may jar the USDOLLAR Index from its two-plus week consolidation - at least that's what traders are gearing up for. With several "medium" and "high" ranked data releases over the next few days, we don't think it's very likely that the recent ranges seen formed in EURUSD, GBPUSD, or USDJPY are likely to hold.
For GBPUSD in particular, the end of the week should be volatile. On Thursday, the Bank of England will hold its monthly policy meeting, but will also simultaneously release its policy minutes and the Quarterly Inflation Report; economists are dubbing its 'Super Thursday.' This should provide the market with a thorough, comprehensive, and insightful view of how BoE policymakers will proceed over the next few months - and perhaps prove to be quite the strong catalyst for the British Pound.
GBPUSD, like other USD-pairs, requires patience before any trade is taken. Much like in USDJPY, where price has struggled to break through key resistance near ¥124.60/65, GBPUSD has seen a zone of resistance carved out around $1.5660/5700. Ultimately, a break of the USDOLLAR Index's broader range will likely ensue hand-in-hand with such developments should they occur; we're open to both possibilities and outlined targets for both bull and bear outcomes in the USDOLLAR Index last week.
See the above video for technical considerations in EURUSD, GBPUSD, USDJPY, AUDUSD, and the USDOLLAR Index.
--- Written by Christopher Vecchio, Currency Strategist
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