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US Dollar Returns to Resistance, NFP on Deck: EUR/USD, USD/JPY

US Dollar Returns to Resistance, NFP on Deck: EUR/USD, USD/JPY

2020-02-06 14:45:00
James Stanley, Currency Strategist
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US Dollar, EUR/USD, USD/JPY Price Analysis

  • US Dollar strength has come roaring back this week.
  • This sets the stage for tomorrow’s NFP report.
  • Both EUR/USD and USD/JPY have put in moves to key zones on the back of this week’s USD price action.

US Dollar Bulls Take Over… Again

US Dollar strength is starting to become a trend in 2020 trade…

Despite last week’s post-FOMC sell-off, US Dollar bulls came back into the matter this week and so far, it’s been a one-way show. The USD has pushed up to yet another zone of key resistance, this time around the 98.33 level that was in-play in November and early-December. This zone had similarly set resistance in April and May of last year; and with Non-Farm Payrolls now less than 24 hours away, it seems the stage has been set in the US Dollar’s technical backdrop. This equates to themes in both EUR/USD and USD/JPY which remain of interest ahead of tomorrow’s jobs reports.

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US Dollar Daily Chart

us dollar price chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD Re-Tests Key Support Zone

Given that onslaught of USD-strength, EUR/USD has seen price action revert right back down to a big zone of support that’s been holding the lows for the past three-and-a-half months. Given the increasing frequency of tests, this zone may not hold for much longer and this could become an interesting setup for those looking for a continuation of USD-strength around tomorrow’s NFP. Downside breakout potential exists, with next supports located around 1.0955 followed by the 1.0900 psychological level.

EUR/USD BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -14% -5% -12%
Weekly -5% 20% 0%
What does it mean for price action?
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EUR/USD Eight-Hour Price Chart

eurusd eight hour price chart

Chart prepared by James Stanley; EURUSD on Tradingview

USD/JPY Re-Tests Key Resistance

Another area that’s shown significant movement around this recent USD-theme has been USD/JPY. Last week saw the pair taken-over by both USD-weakness and JPY-strength as fears of the spreading coronavirus took global markets by hold. That threat has dissipated a bit so far this week, and in response USD/JPY has reversed much of that prior bearish move.

USD/JPY MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -4% -11% -9%
Weekly -14% 4% -3%
What does it mean for price action?
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But – given the longer-term technical backdrop, along with the potential for change in both USD and fear-based themes around coronavirus, the short-side of the pair can remain as attractive as long as price action remains subdued below the January high. This keeps the door open for short-side USD-scenarios in the pair ahead of and around tomorrow’s NFP report.

USDJPY Daily Price Chart

usdjpy daily price chart

Chart prepared by James Stanley; USDJPY on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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