US Dollar Price Outlook Talking Points:
- The US Dollar has put in a strong finish to August and a very strong start to September as the currency continued to breakout to fresh two-year-highs through the US holiday.
- Both EUR/USD and GBP/USD have broken down to fresh two-year-lows, with GBP/USD snapping back to find short-term resistance from a long-term trend-line earlier this morning. Can sellers continue to push with US markets re-opening after a long weekend?
- DailyFX Forecasts are published on a variety of markets such as Gold, 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.
US Dollar Puts in the Work During Labor Day
September is getting off to a slow start on the calendar but not on the charts, as the US Dollar has broken out to fresh two-year-highs despite yesterday’s holiday in the US. Going along with that move, EUR/USD has finally pushed-below the 1.1000 psychological level for the first time since May of 2017 and sellers have continued to drive below the psychological level. Similar to USD, Gold has also held a bid through early-month trade after last week’s pullback found support around the 1517 level. And stocks, so far, have traded tepidly, with S&P futures holding resistance around the same 2945 level that held multiple advances since early-August.
This puts heavy focus on this week’s data, closing off with the NFP report on Friday. Between now and then, highlights include tomorrow’s Bank of Canada rate decision and US ISM numbers released on Wednesday and Thursday, and Canadian employment numbers on Friday morning.
DailyFX Economic Calendar – High-Impact Events for This Week (Times in Eastern)
Chart prepared by James Stanley
US Dollar Breaks Out – Where to Next?
The US Dollar pushed higher on Friday, touching up to a fresh two-year-high but pulling back ahead of the weekly close. That move has continued through the US holiday and this morning, even more topside drive has shown as the US Dollar has broken-out to another fresh two-year-high.
As the European Central Bank appears set to cut rates again next week, and with expectations for aggressive cuts from the Fed have continuing to soften, this has left the Dollar vulnerable to gains.
The next obvious level of resistance potential is around the 100.00 level; and on a short-term basis, a range has developed after another push-higher during last night’s Asian session. Given the consistency of last week’s trend, there are a number of short-term support/resistance levels that could be of interest for bullish continuation strategies.
US Dollar Hourly Price Chart
Chart prepared by James Stanley; US Dollar on Tradingview
EUR/USD Breaks Down – Below 1.1000 For First Time in 2 Years
Going along with the late-week move in the US Dollar was a break-lower in EUR/USD. This comes on the heels of last week’s comment from Christine Lagarde indicating that the ECB hasn’t yet hit the lower-bound for interest rates. This willingness to continue cutting while the Fed continues to try to try to strike a tone of stability has created some short-side drive in the pair.
Chasing the move could be difficult from here, especially considering the context of US markets re-opening after a holiday weekend. This can keep attention towards the 1.1000 level for lower-high resistance; and for those looking to address the matter aggressively, a short-term zone of interest exists from 1.0961-1.0975.
EUR/USD Hourly Price Chart
Chart prepared by James Stanley; EURUSD on Tradingview
GBP/USD Tests Below 1.2000
Similarly, in the British Pound, GBP/USD broke-down during the US holiday to touch a fresh two-year-low. However, unlike the Euro, GBP/USD has snapped back ahead of the US open as driven by Brexit-headlines.
In-play is a long-term trend-line that helped to set support last month as August price action built a doji.
GBP/USD Monthly Price Chart
Chart prepared by James Stanley; GBPUSD on Tradingview
The early-week push below that trend-line led to those fresh lows, but already this morning prices have snapped back for a resistance test of this level, as shown in blue on the hourly chart of GBP/USD below.
GBP/USD Hourly Price Chart
Chart prepared by James Stanley; GBPUSD on Tradingview
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or 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
