US Dollar, EURUSD, USDJPY Talking Points:
- The US Dollar has continued its descent following yesterday’s Humphrey Hawkins testimony from FOMC Chair, Jerome Powell, further eradicating prior February gains.
- The longer-term range in EURUSD continues to hold despite a seeming lack of excitement from buyers. The pair did test the 1.1400-handle earlier but was unable to hold. USDJPY remains of interest for USD-bulls as the pair has held above the 110.30 support level that came into play earlier in the month; and a near-parabolic like move has priced into Cable (GBPUSD) as prospects of a No-Deal Brexit get further priced-out of the equation.
- DailyFX Forecasts are published 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.
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US Dollar Tests Through Key Support Ahead of Powell’s Day Two
The US Dollar has continued to push-lower after yesterday’s start of the Fed’s twice-annual Humphrey Hawkins testimony. That event was without any significant surprises, but the opening remarks did help the US Dollar catch a quick bid up to resistance at 96.47. But, as the Q&A began USD sellers showed-up, and prices soon pushed down to fresh near-term lows. By 2PM ET, DXY had already re-engaged with the support zone around the 96-handle, and that held for a few hours. But, around the Euro open more sellers showed up, and prices pushed below that key support zone to establish a fresh three-week-lows.
On the below four-hour chart, I’ve applied a Fibonacci retracement to the post-FOMC bullish run in DXY, and this highlights a couple areas of interest. That prior area of short-term support around the 96-handle becomes of interest for lower-high resistance potential. Given how quickly this downside move has priced-in, traders can keep aspirations for resistance as high as the 96.27 level that had previously provided support but, as of yet, hasn’t shown much for resistance. On the underside of price action, the 95.63 level is of interest, as this is the 78.6% retracement of that move at a level that had previously provided late-January swing-support and early-February swing resistance.
US Dollar Four-Hour Price Chart
EURUSD Moves Higher, Almost Begrudgingly
The topside move over the past two weeks in EURUSD appears to be one of the least-loved themes across the FX-space at the moment. While the range in the pair has held for now more than three months, the visit to support a couple of weeks ago opened the door for the bullish side of that formation to fill-in.
EURUSD Daily Price Chart
But buyers, while furnishing higher-low support throughout the period, have been very shy at fresh near-term highs, helping price action to build into a rising wedge pattern. Such patterns will often be treated for bearish reversal potential given the fact that bulls show less enthusiasm at fresh highs than what shows at the lows.
The big question around EURUSD is whether that short-term bearish reversal shows up before the longer-term range can revisit resistance. The resistance side of that range begins at 1.1448 and extends up to 1.1500. And for those that are harboring a longer-term bearish bias against the single currency, this can be an interesting time to be following the market as that range could be approached with a prior trend-side bias.
EURUSD Two-Hour Price Chart
USDJPY Re-Tests 110.30 – Revisit to Support at Prior Resistance
For bullish USD-strategies, USDJPY remains of interest, and the past 24 hours are perhaps a good illustration as to why. Despite the fact that the US Dollar has sold off over the past day, USDJPY has put in a re-check of support while holding the prior low around the 110.30 level. This comes after a false breakout at fresh 2019 highs at the beginning of this week, and this illustrates the potential of an even weaker-Yen than what’s been showing around the US Dollar.
In USDJPY, the big question is whether buyers remain on the sidelines until the longer-term zone of resistance comes into play for support. That prior resistance zone runs from 109.67-110.00, and this had held the highs for about a month until the pair’s bullish breakout two weeks ago. But, as yet, this zone hasn’t been tested for higher low support, so if prices can drive down there, an interesting test will be in the cards. A hold of that support keeps the door open for longer-term bullish strategies in USDJPY, targeting the 112.34 Fibonacci level.
USDJPY Four-Hour Price Chart
GBPUSD: Cable Goes Parabolic on Way to Fresh Seven-Month Highs
The big mover on the week so far has been the British Pound, as Brexit pessimism has been getting priced-out of the equation. The scenario was explained by our own Nick Cawley earlier this morning, and as the prospect of No-Deal Brexit diminishes, buyers have been making their mark to push the pair to fresh seven-month highs.
The big question, as is often the case with such a parabolic move, is for how long might bulls continue? Many traders will often abandon their fundamentals in such a scenario for a simple fear of missing out; hoping that the move either continues or quickly reverses to allow for a quick short-term move. But this can be dangerous way of approaching matters, particularly in a headline-driven environment that can see prices turn-on-a-dime.
For those that are looking for support potential in order to base bullish trend approaches, there isn’t much that’s nearby given how quickly this move has priced-in. On the hourly chart below, I’ve attempted to identify a few of these levels, with a nearby prior swing-high at 1.3284 being the closest to current prices. A bit-lower offered a prior price action swing around the 1.3238 area; and below that is the 1.3181 Fibonacci level which is the 38.2% Fibonacci retracement of the 2018 bearish move in the pair.
GBPUSD Hourly 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 Q4 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 an abundance 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
