US Dollar Talking Points:
- US Dollar bulls have made a strong comeback after last Thursday’s GDP report, as fresh weekly lows have turned into fresh weekly highs after DXY re-tested the 96.68 level this morning. This week’s economic calendar is loaded with drivers, with a series of Central Bank rate announcements ahead of the Friday release of US and Canadian jobs numbers.
- With risk-on taking-hold, JPY-weakness has become a pronounced theme across the FX-space, illustrated by USDJPY’s re-test of the 112.00 level earlier this morning. USDCAD has recently put in bullish items after Friday’s sell-off in Oil, and EURUSD is giving the appearance that longer-term range support may be tested before resistance comes into play. In GBPUSD, last week’s bullish breakout has finally softened, and prices are testing a key Fibonacci level for short-term support.
- 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.
Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.
US Dollar Bulls Push Back to Finish Erasing Last Week’s Losses
Last week was a tale of two trends in the US Dollar, as the currency came into the week selling off, setting a fresh low on Thursday morning; at which point buyers came back to push prices above the 96-level on DXY. That strength has continued into this week’s open, and at this point, prices have already climbed above any levels traded at last week to create a fresh one-week-high. At this point, a bit of resistance has shown off of the previously-important 96.68 level, but given the momentum showing this morning, that may not hold for long.
US Dollar Two-Hour Price Chart
Chart prepared by James Stanley
A Busy Economic Calendar Ahead
This week is full of potential drivers, w ith both high-impact data and Central Bank rate announcements on the horizon. Tonight brings the RBA, Wednesday brings the Bank of Canada and Thursday the European Central Bank as rate policy takes center stage. On Friday, both US and Canadian jobs numbers are released at 8:30 AM ET, and each of these will likely receive considerable focus in the latter-portion of this week.
DailyFX Economic Calendar – High-Impact for the Week of March 4, 2019 (All Times ET)
Chart prepared by James Stanley
EURUSD Falls Through Falling Wedge, Makes Run at Longer-Term Range Support
The longer-term EURUSD range remains; but on a shorter-term basis, another formation had begun to build last week’s that’s filled-in, and that’s the rising wedge pattern that built in the middle of that longer-term setup. I had discussed this formation in Thursday’s webinar, and sellers have thus far posed a bearish breach through the bottom-side of the formation. The longer-term support zone that runs from 1.1215-1.1300 is fast-nearing, and this carries with it the question of whether or not Euro bears will be able to make a deeper push within or, perhaps even below that area on the chart.
EURUSD Four-Hour Price Chart
Chart prepared by James Stanley
GBPUSD Breakout Pulls Back to Fibonacci Support
The aggressive bullish rip in GBP has finally started to slow after a very respectable showing in the second-half of February. As diminishing odds for No-Deal or Hard-Brexit options have gotten priced-out of the market, bulls have re-grabbed control of Sterling price action. As looked at last week, that move quickly got overbought and the re-appearance of USD-strength on Thursday and Friday helped to push prices back down to support.
Ahead of last week’s close, GBPUSD settled at support around the 1.3187 Fibonacci level that was looked at earlier in the day. After a bounce to open this week’s trade, sellers have made another push down to this Fibonacci level before seeing a similar response. On the below chart, this support area has been highlighted, but I’ve also added a bearish trend-line taken from last week’s swing-highs. This presents a descending triangle formation, which will often be approached in a bearish fashion; and this may be helpful for long-term GBPUSD bulls, as this may highlight the potential for a deeper check of support around the 1.3117 area on the chart.
GBPUSD Two-Hour Price Chart
Chart prepared by James Stanley
USDJPY Checks 112.00 – Can Bulls Continue to Push?
L ast week saw two topside breakouts in USDJPY as Yen-weakness has become one of the more workable themes across the FX space. The first breakout didn’t take, but after pulling back to find support around prior swing-lows, buyers were able to push a successful breakout on the second attempt, taking place around Thursday/Friday as USD-strength came back into favor.
USDJPY is now nearing the 112.00 handle, and just beyond this level is an imposing area of support around the 112.34 Fibonacci level. This is the 76.4% retracement of the same major move that’s caught a series of support/resistance levels with this year’s price action; and that price of 112.34 offered multiple support inflections in Q4, just before USDJPY began to tank.
USDJPY Daily Price Chart
Chart prepared by James Stanley
USDCAD Bulls Get Busy
I had looked at Oil on Friday, sharing that prices had just begun to test a key area of resistance. That resistance elicited an outsized reaction on Friday that Oil markets haven’t quite recovered from yet; but along the way went CAD weakness as the Canadian currency quickly fell along with Oil.
I had looked at bullish ideas in USDCAD in Thursday’s webinar, and after last week’s response, there may be the potential for continuation. USDCAD has just started to test the 1.3325 resistance level, and just above this area a series of Fibonacci levels that helped to mark the January swing-highs. If prices can stage a topside break through this zone that runs from 1.3361-1.3385, bullish longer-term strategies may soon become attractive again in USDCAD.
USDCAD 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
