US Dollar, EURUSD Talking Points:
- US Equities continue to bounce after yesterday’s early-session sell-off. The S&P is re-approaching the 2800 level while the Dow is finding a bit of support off of the 25,816 area on the chart. The big question is whether that strength continues, or whether yesterday’s selling was a signal of deeper sell-offs on the horizon: The first two months of this year were undeniably bullish in US equities, showing in stark contrast to the selling that took global markets by storm in Q4 of last year. Can that 2019 strength continue into the end of Q1? Or is another bout of selling-around-the-corner, similar to what was seen in October of last year?
- FX markets remain in varying states of consolidation, with short-term USD bulls making a push-higher on the chart, extending the post-GDP run in the currency after last Thursday’s fresh low. EURUSD has fallen below a rising wedge pattern, but sellers have pulled up short of testing the longer-term support zone that runs from 1.1215-1.1300. And tomorrow brings a Bank of Canada rate decision: USDCAD is fast-approaching a key resistance area on the chart that had previously held the highs in late-January.
- 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 Continue to Push
US Dollar strength has continued to show in the early-part of this week, with DXY climbing above and then finding support at the 96.68 level looked at yesterday. Prices are now nearing the 23.6% Fibonacci retracement of the February bullish run at 96.85, and beyond that is the 97.00 area that marks the January swing-high. If buyers are able to push beyond that price, follow-through resistance potential exists at 97.37 (the February swing high) and 97.71 (the November, December 2018 swing highs).
US Dollar Two-Hour Price Chart
Chart prepared by James Stanley
EURUSD Gyrates Towards Range Support
Yesterday saw EURUSD fall through the bottom of a rising wedge pattern, making a fast run at longer-term range support that runs from 1.1215-1.1300. That range has been in-force for almost four months now; and this comes in stark contrast to the strong sell-side momentum that had existed in the pair before support began to hold the lows.
EURUSD Eight-Hour Price Chart
Chart prepared by James Stanley
After yesterday’s bearish move, EURUSD sellers have begun to slow their approach as that longer-term support has neared. This has led into a build of swing-lows around the 1.1320 area, which may make the prospect of short-side approaches a bit of a challenge given the close proximity to longer-term support just below.
EURUSD Two-Hour Price Chart
Chart prepared by James Stanley
WTI Re-Approaches Key Resistance
Volatility has been flowing back into Oil of recent, and last Friday saw a re-test of a key level on the chart at $57.47. This is the 38.2% Fibonacci retracement of the 2016-2018 major move, and this is the level that had held the highs on multiple occasions in the latter-half of February. As discussed in last Thursday’s webinar, that was a level that could open the door to short-side swings; and after this came into play on Friday, sellers pounced to push prices down below the $56-handle.
Prices have been recovering so far this week, and WTI is now less than a dollar away from a re-test of that resistance. The big question here – is the third time the charm? Will bulls be able to break through after last week’s resistance inflection brought a higher-low into the mix?
WTI Crude Oil Four-Hour Price Chart
Chart prepared by James Stanley
USDCAD Strength Nearing Re-Test of Key Resistance
USDCAD strength continues to show, and this comes in stark contrast to the state of that market looked at in last Thursday’s webinar. At the time, USDCAD was re-testing the Fibonacci level at 1.3132, mired by a symmetrical wedge formation that’s been guiding the congestion in the pair for most of 2019.
Using Oil as a driver, I had looked at the topside of USDCAD in that webinar, and that theme has continued to run. Prices are now trading at fresh monthly highs; but quickly nearing on the chart is a big zone of resistance that contains multiple Fibonacci levels. This is also the zone that helped to stop the January advance in its tracks.
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
