Skip to content
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
US Dollar Reversal Gathering Pace - Key Levels to Watch

US Dollar Reversal Gathering Pace - Key Levels to Watch

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Both EUR/USD and USD/JPY have reversed sharply in recent days, although neither has reached critical levels to say their trends have changed...yet.

- On the other hand, AUD/USD, GBP/USD, and NZD/USD have all started to or appear to be on the verge of more significant technical breakdowns.

- Retail crowd positioning is easing again now that the US Dollar is taking back its recent losses.

Upcoming Webinars for Week of August 27 to September 1, 2017

Today at 7:30 EDT/11:30 GMT: Central Bank Weekly

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

It appears that price action at the end of last week and the beginning of this one can be characterized as a washout, or exhaustion low, for the US Dollar. After three strong days of upside action, the question has arisen again, 'is this the US Dollar bottoming process?'

Chart 1: DXY Index Daily Timeframe (July 12 to August 31, 2017)

As we have done previously, it's best to let the market dictate when it's trend reversal is going to take place. After the outside engulfing bar on August 25, the DXY Index now needs to clear 93.44 before we can say with confidence that a near-term bottom has been established. Concurrently, a close through 93.44 would also constitute a break of the daily 21-EMA, which the DXY Index hasn't closed above since June 27.

Chart 2: EUR/USD Daily Timeframe (July 12 to August 31, 2017)

The same can be said about EUR/USD (no surprise given that DXY and EUR/USD are basically mirror images). Price action has been weaker in recent days, but it's still too soon to say that a top is in place. Like DXY, EUR/USD hasn't closed on the other side of its daily 21-EMA since the end of June. Several tests of the key moving average occurred throughout August, but were fruitless in their attempts to break lower. It's possible that this time is different - especially if tomorrow's August US Nonfarm payrolls report comes in as strong as data ahead of time suggests it may be.

See the above video for technical considerations in the DXY Index, EUR/USD, GBP/USD, USD/JPY, AUD/USD, NZD/USD, and Gold.

Read more: Price Action is Promising, but US Dollar Reversal Not Set in Stone

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

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

DISCLOSURES