EURUSD, GBPUSD, US Dollar Talking Points:
- The US Dollar continues to retreat with sellers showing-up again around this morning’s European open. This has helped USD to craft a fresh three-week-low, dropping below the 96.00 area that had helped to provide support yesterday. In a corresponding move, EURUSD tested above the 1.1400-handle, threatening to fill-in the longer-term range formation that’s held in the pair over the past three months.
- The outsized bullish breakout in the British Pound has run into resistance as GBPUSD has held the highs at the 1.3350 area. USDCHF is breaking down this morning, making a run towards the .9902 level of prior support; and USDJPY remains near highs despite the USD bearish push this morning, keeping that pair as an attractive option for strategies based upon USD-strength.
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The US Dollar is posing a bounce from a fresh low this morning, as sellers showed-up during the Euro session and have continued to push the US currency lower. DXY set a fresh three-week-lows after dropping below the 96.00 level yesterday, and this has helped EURUSD to post a topside test above the 1.1400 handle.
In the US Dollar, the area of interest for bears would likely remain around that 96.00 zone of prior support, which could open the door for bearish continuation strategies. Secondary resistance could be followed from the previous support zone, running around the 96.27-96.30 area, taken from the 50% marker of the prior bullish move.
US Dollar Two-Hour Price Chart
Chart prepared by James Stanley
EURUSD Shies Away from Wedge Resistance; Tip-Toes Up to Longer-Term Range Resistance
The longer-term range formation in EURUSD is continuing to hold as buyers have been able to finally pose a push above the 1.1400-handle. The longer-term range has shown resistance in a zone that runs from 1.1448-1.1500, and the big question at this point is whether Euro bulls have the enthusiasm to drive that high.
EURUSD Daily Price Chart
Chart prepared by James Stanley
On a shorter-term basis, prices are testing the resistance side of a rising wedge formation; and as I discussed yesterday , the bullish move in EURUSD over the past two weeks has priced-through in an almost begrudging manner, as buyers have continually slowed the approach upon re-tests of prior highs while remaining fairly active around support (which is what led into the formation of the rising wedge, in the first place).
EURUSD Two-Hour Price Chart
Chart prepared by James Stanley
USDCHF Drops From Parity, Makes Run Towards .9902
Going along with that Euro strength this morning has been a bearish push in USDCHF, with Franc bulls pushing the pair below the parity level that had previously held the lows in the pair. I had looked at this market as part of this week’s FX Setups as an option for working with USD-weakness, and this is part of a longer-term scenario that saw a key resistance level come into play a couple of weeks ago.
Next areas for support potential on the pair are the .9902 area, which had helped to hold the late-January swing-low. After that, .9850 is of interest, followed by the zone that runs from .9750-.9767.
USDCHF Four-Hour Price Chart
Chart prepared by James Stanley
GBPUSD Breakout Pauses
Yesterday saw a strong topside move in the British Pound as the diminishing prospect of Hard-Brexit created a sharp bullish move in the currency. GBPUSD perched to as high as 1.3350, at which point prices began to digest that prior topside move. The big question now is which push is next? Will buyers be able to pose another topside breakout beyond the 1.3350 level? Or, will a pullback be in order before that bullish drive might have the backdrop for continuation. I had looked into each of these scenarios in yesterday’s technical article on the pair entitled, GBPUSD: Cable Rally Goes Overbought on Run to Seven-Month Highs.
GBPUSD Hourly Price Chart
Chart prepared by James Stanley
USDJPY Holds Near Highs as Yen-Weakness Remains
Despite the fact that the US Dollar remains on its backfoot, USDJPY continues to hold near recent highs. Even with the Greenback driving lower throughout this week, USDJPY has retained its prior bullish structure, posing a revisit to earlier February support before pushing back-up to the 111.00 level. This can help to keep the pair as an attractive option for USD-strength strategies; but USDJPY may need a deeper retracement to clear out some stops before the longer-term bullish move might be ready for continuation. I had looked at two manners of approach around the pair in this week’s FX Setups. The first of those was to look for topside breakouts upon prints of fresh highs. And while the fresh high showed up on Monday, continuation did not follow as prices pushed back to that 110.30 support. The second manner of approach remains as an option, with a pullback to find support at a zone of prior resistance. This would be the same resistance zone that helped to hold the highs as part of the ascending triangle in the pair earlier this month, which had led into that breakout up to the 111.00 level.
USDJPY Four-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 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
