EURUSD, GBPUSD, US Dollar Talking Points:
- The US Dollar has continued to hold resistance at monthly highs after another test in the overnight session. The week-long bullish run in the currency may be due for a deeper pullback given the short-term overbought nature of the move; and correspondingly, this has helped EURUSD and GBPUSD put in the initial build of support bases.
- Next week’s economic calendar brings US items on Wednesday and Friday, and an RBNZ rate decision is set for Tuesday afternoon (Wednesday morning in New Zealand). Also of interest is the Wednesday release of UK inflation figures following this week’s moves in Cable, with GBP/USD putting in a reversal around yesterday’s BoE press conference.
- DailyFX Forecasts have been published for Q1, 2019 on a variety of currencies such as the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re 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.
US Dollar Holds Resistance at Monthly Highs
The US Dollar’s week-long bullish run has continued to find resistance at the monthly high around the 96.68 level on DXY. I had looked at this in yesterday’s webinar, honing in on the fact that buyers remained in-control for much of the prior week, driving from a higher-low up for that resistance test. A bit-higher on the chart is the 2019 high around the 97.00 level, and this could be a next item of interest for resistance. On the inside of price action, 96.47 remains of interest and a bit-lower, 96.30 and 96.04 could keep the door open for support themes in the currency.
US Dollar Hourly Price Chart
Chart prepared by James Stanley
Next Week’s Economic Calendar
Next week’s economic calendar brings a few items of note for the US Dollar. January CPI figures are released on Wednesday, and then on Friday Advance Retail Sales is followed by U of Mich Consumer Sentiment. Outside of the US, an RBNZ rate decision is set to take place on Tuesday, and UK inflation figures are released on Wednesday morning. Each of these will likely receive considerable focus from Kiwi and Cable traders, respectively.
DailyFX Economic Calendar: High-Impact Events for the Week of February 11, 2019
Chart prepared by James Stanley
EUR/USD Attempts to Stage Support After Bearish First Week of Feb
EUR/USD put in a resistance test on the final day of January, pushing above the top-end of the resistance zone that I’ve been following at 1.1500. But that was soon met by sellers, and as the door opened into February, bears began to make a greater push on the charts. That downward momentum remained in-effect for most of this week, with a bit of support showing around the 1.1325 level in yesterday’s trade. Bears were again thwarted at this level upon a re-test this morning, and already prices are pushing up for a test of the aggressively-sloped trend-line as taken from February 1st and 5th swing-highs.
EUR/USD Hourly Price Chart
Chart prepared by James Stanley
GBP/USD Attempts to Build Support Base
It was a surprisingly bullish month of January for the British Pound. The currency came into last month spilling down to a fresh 20-month low, testing below the 1.2500 level. But shortly after that saw a far different theme as buyers pushed prices all the way up to the 1.3200 handle by the end of January. A bit of softening in that theme developed last week, and coming into this week, Cable was holding above the 1.3000 level, but that didn’t last for long.
Negative data earlier in the week brought a support break, and this hastened during the early portion of yesterday’s BoE rate decision when the bank cut growth forecasts while Mr. Carney warned that the ‘Fog of Brexit’ was a constraint to business conditions. But – he later said that clarity on Brexit could bring upside, and this brought upon a reversal in that bearish move and prices soon made a fast move towards that 1.3000 psychological level. A short-term pullback from that move saw buyers re-enter around the 1.2920 Fibonacci level, leading to the potential for a continuation of higher-lows in the pair.
A topside break through the 1.3000 level next week could soon re-open the door to bullish strategies in the pair. But as discussed throughout this week, traders would likely look to keep that strategy shorter-term in nature given the messy fundamental backdrop around the UK, and GBP as Brexit-day is now just seven weeks away.
GBP/USD Two-Hour Price 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
Contact and follow James on Twitter: @JStanleyFX
