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Talking Points:

- Last week ended on a sour note following the disappointing NFP release on Friday. US Stocks closed the week by selling into the close, reversing a large portion of last week’s gains; and we’ve seen a bounce developing in equity futures as we approach this morning’s US open. With corporate earnings kicking into gear later this week, the focus will be on equities as expectations are very high for Q1 performance numbers.

- The US Dollar closed Q1 and opened Q2 on an optimistic note as gains pushed DXY back-above the 90.00 level. But that strength could not last, and after the Friday reversal around NFP, bears have remained in-control to push DXY below the 90.00 level. On Friday, we looked at a couple of setups around the US Dollar that remain open as we move into this week.

- Are you looking to improve your trading approach? Check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

CPI, FOMC Minutes on the Docket Followed by Corporate Earnings

This week’s economic calendar begins to shift the focus towards corporate earnings out of the United States. On Thursday, both Delta and Blackrock announce Q1 performance numbers, and this is followed by the Friday release of the same from Citigroup, JP Morgan and Wells Fargo. Earnings season runs through the rest of April, and many of the big tech names are reporting later in the month. Netflix reports results next Monday, April 16th, Facebook reports on April 25th, Google and Amazon both report on April 26th, and Apple announces on May 1st.

But before we get deeper into earnings, we have a couple of key macro drivers to work with on this week’s economic calendar, as Wednesday brings the release of March inflation numbers out of the United States along with meeting minutes from the Fed’s March rate hike later in the day. The next morning brings ECB meeting minutes from the March rate decision, but expectations here are relatively low for any ‘new’ themes or items of interest.

DailyFX Economic Calendar: High-Impact Events for Week of April 9, 2018

DailyFX Economic Docket High Impact Events Week of April 9, 2018

prepared by James Stanley

US Equity Volatility Continues After Friday’s Sell-Off

Last week was fairly volatile across US equities, and the week ended on a sour note as US stocks sold-off after the disappointing NFP report released earlier in the Friday session. The S&P 500 came into last with a sell-off, eventually finding some support around 2554, which is the 38.2% retracement of the post-Election move on the index. That support held all the way until Thursday, at which point resistance began to show off of the 38.2% retracement of the February sell-off. After the Friday NFP report, bears were back in US stocks and that downward price action continued into the close of last week.

So far for this week, US equity futures have bounced from that Friday low – but it does not appear as though this story is yet over as volatility continues to show in US equities. As we move deeper into this week, with the Wednesday release of US inflation numbers and FOMC minutes, followed by corporate earnings from some very large and relevant names –we will likely see this volatility across US equities take up an even more prominent portion of the spotlight (and the headlines).

S&P 500 Four-Hour Chart: Bulls Unable to Hold Last Week’s Strength After Fibonacci Resistance

S&P 500 Four-Hour Chart

Chart prepared by James Stanley

US Dollar Back Below 90.00

One of the more interesting items from the past couple of weeks was strength showing in the US Dollar as we closed out Q1 and opened into Q2. A spate of strength developed in USD over the final week of March, and this hung on for most of last week as DXY struggled to stay above the 90.00 level. On Thursday, DXY found a bit of resistance around 90.60 and after another test to take that level out a day later had failed, bears were right back in action and the US Dollar was moving-lower again.

As we open up this week, DXY is right back at the 90.00 level after the post-NFP sell-off. This keeps the Dollar in a rather vulnerable position, as a continuation of weakness in the bigger-picture trend takes the spotlight. Even though the Federal Reserve is one of the few large Central Banks actively tightening policy and raising rates, the US Dollar has remained rather weak for over a year now, and this is pointing to the deductive fact that something else is doing the driving. We’ve previously tied this longer-term bearish drive back to fiscal policy out of the United States, and this is something that could continue to provide pressure on the US Dollar as we move deeper into the year.

US Dollar via ‘DXY’ Four-Hour Chart: Back –Below 90.00 After Last Week’s Bullish Push Finds Resistance

us dollar four hour chart

Chart prepared by James Stanley

EUR/USD Back Above 1.2300 After Last Week’s Support Test

On the side of USD-weakness, we had looked at EUR/USD testing support last week around the mid-March lows. This was basically looking to play a range with a prior trend-side bias, as EUR/USD has spent much of the past few months moving back-and-forth after a concerted up-trend developed throughout 2017. At this point, prices are making a fast push towards a prior zone of interest around 1.2335-1.2350. Traders can look for near-term resistance in this area, at which point the prospect of higher-low support can keep the door open for bullish continuation towards the 1.2400 level.

EUR/USD Four-Hour Chart: Back Above 1.2300 After Support Test at Mid-March Lows

eurusd four hour chart

Chart prepared by James Stanley

GBP/USD Rallies After Higher-Low Support at 1.4000

Last week we’d looked at GBP/USD as prices were pulling back after the prior week’s breakout. We were following an area of support around the 1.4000 psychological level in the effort of catching that higher-low, and after a bit of grind, bulls came in on Friday to take-over on the pair. At this stage, we’ve re-enaged above the 1.4100 level, and the prospect of bullish continuation remains.

As we move deeper into this week, traders can use that prior area of short-term resistance to look for higher-low support. This area runs from 1.4067-1.4088, and this area had worked as support in latter-March followed resistance in the first week of April. As we move deeper into the month of April, this area could be re-purposed for higher-low support plays.

GBP/USD Four-Hour Chart: Support Becomes Resistance Becomes Support 1.4067-1.4088

gbpusd four hour chart

Chart prepared by James Stanley

USD/CAD Opens the Week Near Confluent Support Zone

We’d looked at this pair on Friday as one of our FX setups for this week, and as we’ve opened with a bit of strength, that potential remains. USD/CAD saw a down-side breakout last week, and prices soon ran down to a Friday low of 1.2729. This is very near a support zone we’ve been following, as we have confluence just a bit-lower from two different Fibonacci levels. At 1.2723, we have the 38.2% retracement of the May-September, 2017 sell-off and at 1.2719, we have the 38.2% retracement of the September 2017 – March 2018 bullish run.

USD/CAD Daily Chart: Bullish Continuation Potential Should Confluent Support Hold

usdcad daily chart

Chart prepared by James Stanley

USD/JPY Carrying Bullish Potential

Last week brought a bullish breakout in USD/JPY, and this runs counter to what’s been a very bearish 2018 so far in the pair. Last week brought upon a fresh monthly high in the pair, and after USD-weakness began to show after NFP, it looked as though bearish resumption might’ve been around the corner on USD/JPY.

But – at this stage, there is still a bullish case to be made on the pair as we’ve seen a continuation of higher-highs and higher-lows over the past two weeks. Critical for this theme will be how the pair holds up on a deeper test of support. If we do see higher-low support hold in the region from 106.35-106.61, then topside setups will remain attractive, at least in the near-term, and targets can be directed towards 107.90/108.00. If, however, bulls are unable to hold support in this area, then prices are back into the sequence of near-term lower-lows and highs, and the door re-opens for downside strategies in USD/JPY.

USD/JPY Four-Hour Chart: Bullish Prospects Remain After Last Week’s Fresh Monthly Highs

usdjpy four hour chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

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