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USDollar Technical Analysis: March High Haunts USD Bulls

USDollar Technical Analysis: March High Haunts USD Bulls

Tyler Yell, CMT, Currency Strategist

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Talking Points:

  • USDollar Technical Strategy: Now Looking to Sell Strength
  • March 13th, 2015 Daily Range Resistance of 12,064- 12,149 Is Trend Defining
  • Support Zone: Currently at 50% retracement of September 18th-September 25th range

October hasn’t been kind to the USDollar just like in recent years as per seasonal studies. A clear change of fortunes could be in the process. It starts with what was strong now falling blindly as other currencies like the AUD, NZD, and CAD, who couldn’t catch a bid to save their life, are now outperforming across the board not to mention other commodity-linked currencies like the NOK, MXN, & ZAR. This aggressive bid in Commodity FX suggests USD weakness is upon us, and a break below 12,000 toward the 50% retracement of September 18th-September 25th range is bringing medium strength into doubt. . Because we’ re within the opening range of Q4, this kind of volatility is expected, USDollar is expected to keep up the trend of higher lows on its way to new multi-year highs. Only a break below 11,865, the September low would change that view in the medium-term.

On a longer timeframe, the USDollar may have seen another failure of key resistance that will prompt a retest of the trendline drawn off the May low. A break below the September 18th-September 25th range would prompt attention towards a more significant reversal. If support near the 38.2% retracement at 12,012 continues to hold, the bias will remain higher for US dollar. Patient traders may prefer to see a break of the equidistant corrective channel, currently near 12,075.

The global data continues to disappoint, especially in Germany, which could keep the Fed from hiking due to developments abroad. Even the other central bank’s dovishness isn’t giving USD the boost it once did. Q4 Opening Range Resistance currently sits at 12,085 and that would need to break before we give preference to the bullish view over the medium term as this unwind could continue to surprise many given how many longs have built into this position that may soon unwind.

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