US Dollar Talking Points:
- US Dollar bears got snapped back this morning on the heels of a blowout NFP release.
- The big question is one of continuation: Will this be but a blip in the radar or is it the start of a new trend?
- 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 Rips on NFP Release
This morning brought a strong change-of-pace to US Dollar trends as a blowout NFP report squeezed sellers. Our own Rich Dvorak discussed the details inside of the report as the headline number came in at a whopping +266k versus an expectation for +180k. Prior months were revised-higher as well, and there was little reason for pessimism in the details of this morning’s US employment numbers, helping the US Dollar to jump-up to a key level on the chart around 97.68, which was the mid-November swing-low in DXY.
US Dollar Hourly Price Chart: Surge to Resistance on Strong NFP Release
Chart prepared by James Stanley; US Dollar on Tradingview
The big question at this point is whether this singular data print can reverse the tides that have shown so visibly of recent in the Greenback. October brought a bearish move as price action fell-below a rising wedge formation, which will often be approached with the aim of bearish reversals. November saw calm take-over but sellers remained vigilant, offering the currency lower at the 50% retracement of that October sell-off, and this was in a price area confluent with a few other items of note that ran from 98.33-98.50.
After a second failed test in this zone in late-November, sellers re-emerged and took control through the first five days of December, pushing DXY back-below the 97.50 level. But, as looked at yesterday in the pre-NFP webinar, the US Dollar was looking oversold on a short-term basis and this opened the door to resistance potential at a key area on the chart, taken around the price of 97.70 on DXY, which had previously functioned as the yearly high in November and December of last year.
Will buyers continue to drive, thereby erasing the early-December sell-off? Or will sellers use this blip-higher as another jumping off point for short-side USD strategies?
US Dollar Daily Price Chart: Re-Testing a Key Level
Chart prepared by James Stanley; US Dollar on Tradingview
Double-Trouble for USD/CAD After Canadian Jobs Disappoints
US jobs numbers weren’t the only employment data points released this morning as Canadian jobs also came out at 8:30 AM ET; and unlike the NFP report, Canadian jobs came in below expectations, providing an extra impact to USD/CAD which saw both US Dollar strength to go along with Canadian Dollar weakness. But – similarly this has amounted to a counter-trend move up to a key level of resistance, carrying with it the question as to whether sellers will use this bounce to position-in at more favorable rates or whether this is a true reversal in that recent trend.
At this point, USD/CAD is quite stretched while testing resistance at a prior zone of support. I had used the 1.3250-1.3270 area for short-term bullish plays a few weeks ago, and this level was soundly broken-thru after the Wednesday Bank of Canada rate decision. This is also around the secondary resistance zone looked at in yesterday’s webinar, which came into play as prices sliced right through the first zone around 1.3208-13222.
USD/CAD Four-Hour Price Chart
Chart prepared by James Stanley; USDCAD on Tradingview
For USD Fade Scenarios, GBP/USD
For those looking to fade this morning’s excitement in the US Dollar, prior themes of USD-weakness could be very attractive, key of which is GBP/USD which has been in the midst of an incredible breakout over the past week after taking out the 1.3000 level.
Prices have pulled back to the 1.3117 price which had previously provided a brief pause in the bullish breakout when prices were working-higher. The move had gotten quite overbought as buyers continued to press the throttle; but this morning’s blip of USD-strength may have just opened the door for bullish trend entries.
GBP/USD Two-Hour 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
