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
  • Consolidation or bull flag? A bull flag is a continuation pattern that occurs as a brief pause in the trend following a strong price move higher. Learn how to better spot these formations here: https://t.co/yOEvLjsLNT https://t.co/8BjIJdOpti
  • RT @KyleR_IG: Certainly a highlight of my career. If I was smart enough, I would have made a wisecrack about #Evergrande. #earthquake http…
  • RT @FxWestwater: Australian Dollar Forecast: Evergrande, PBOC, Risk Trends, BoJ on the Radar Link: https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2021/09/21/Australian-Dollar-Forecast-Evergrande-PBOC-Risk-Trends-BoJ-on-the-Radar.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https://t.co/L0…
  • 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/t9FlspUVZz https://t.co/9FeeIfuozg
  • The Bank of England should scrap the last of its quantitative easing plans and start preparing for an increase in interest rates. All 9 members of the shadow monetary policy committee said the Bank should end the QE programme early, with almost £50bln left - The Times
  • The Nasdaq 100 gains modestly after Monday's sharp losses, but sentiment remains cautious ahead of the FOMC rate decision. Get your market update from @Tams707 here:https://t.co/HLDN2JGfAf https://t.co/mRhlLUBGq6
  • Ethereum continues its sharp slide, currently down more than 4.7% on the day $ETHUSD #Ethereum https://t.co/BoTAiljU0y
  • Rising energy prices weigh on European policymakers as consumers fear higher prices, carbon dioxide shortages (CO2), and cold winter. Get your market update from @Tams707 here:https://t.co/HLDN2JGfAf https://t.co/tWhlMrXN4G
  • US President Biden: - Will discuss a trade deal with UK PM Boris Johnson - I do not want to see a closure of Irish borders
  • AUD/USD continues to trend lower ahead of tomorrow's FOMC meeting. Further $USD strength could bring the August low into play $AUDUSD https://t.co/X3zfpYN8Qe
EUR/USD Head & Shoulders Still Valid; Asymmetric Risk for GBP/USD

EUR/USD Head & Shoulders Still Valid; Asymmetric Risk for GBP/USD

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- The DXY Index held the neckline retest of its inverse head & shoulders pattern at 94.29, while EUR/USD's retest of its head & shoulders pattern of 1.1663 held up as well.

- With a BOE rate hike nearly 100% priced-in for Thursday, the event poses asymmetric risk to the British Pound.

- Retail trader sentiment suggests the near-term outlook for the US Dollar is neutral.

Upcoming Webinars for Week of October 29 to November 3, 2017

Wednesday at 6:00 EDT/10:00 GMT: Mid-Week Trading Q&A

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

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

The US Dollar is turning back higher today following small losses to start the week, as attention is quickly shifting from the USD-negative political chaos in Washington, D.C. to the expected USD-positive economic developments over the coming days.

Even though market participants are widely dismissing tomorrow's FOMC meeting as a meaningful event - there is a 0% chance of a rate hike, per Fed funds futures - the simple confirmation of the intention to raise rates next month should at a minimum buoy the greenback. Likewise, with a very strong October US Nonfarm Payrolls report due on Friday (really just a 'give-back' number after Hurricanes Harvey and Irma impacted the September report), the market mood is still looking favorable for the US Dollar.

Signifiant technical advances were made by the DXY Index last week with the close through 94.29, the July 26 bearish outside engulfing bar and neckline of the inverse head & shoulders pattern that has formed over the past three months. With the daily 8-, 13-, and 21-EMA moving average envelope rising into the neckline, it appears this level is firming up as key support as we turn into November.

Chart 1: DXY Index Daily Timeframe (June to October 2017)

EUR/USD Head & Shoulders Still Valid; Asymmetric Risk for GBP/USD

Accordingly, with the Euro constituting 57.6% of the DXY Index, it's of no surprise then that the EUR/USD head & shoulders pattern remains valid against 1.1663. The rest that came yesterday proved fruitless, and the batch of mixed Euro-Zone GDP and inflation data earlier today has done no favors for the Euro to help it shake off the bearish sentiment emanating from the ECB meeting last Thursday.

See the above video for technical considerations in the DXY Index, EUR/USD, USD/CHF, USD/CAD, and CAD/JPY, as well as why GBP/USD may be facing asymettric risk at the BOE meeting on Thursday, given the degree to which a rate hike is priced in relative to the possibility that no hike transpires at all.

Read more: FX Markets Brace for Big Week: EZ CPI; BOJ, FOMC, & BOE; US NFP

--- 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