News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • The Japanese #Yen may continue to exhibit a bullish behavior as the Bank of Japan (BoJ) appears to be in no rush to alter the path for monetary policy. Get your #currencies update from @DavidJSong here: https://t.co/HFjc6KGzRw
  • The New Zealand Dollar appears poised to extend its climb against its haven-associated counterparts as long-term trend break hints at cyclical upturn. Get your $NZDUSD market update from @DanielGMoss here: https://t.co/CPxP1Q8B6d https://t.co/n2wESiqnpJ
  • The US Dollar may rise against ASEAN currencies like the Singapore Dollar if local retail sales and sentiment data disappoints. USD/IDR may fall on the Bank of Indonesia. Get your market update from @ddubrovskyFX here:https://t.co/HpH8pXFdLl https://t.co/laHmaZXpJe
  • The US Dollar may rise against the Singapore Dollar and Philippine Peso. USD/MYR’s downtrend holds, but a bullish pattern brews. USD/IDR seems stuck between key technical levels.Get youe #ASEAN currencies market update from @ddubrovskyFX here:https://t.co/TF6DRVp6kX https://t.co/WEtxkdSwxD
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/UVvf51HiVP https://t.co/4wlRjBTCzK
  • The #Dollar has bottoming potential, but that is starting to lose weight as it fails to sustain any lift; next week could be a big one for #USD’s near-term outlook. Get your #currencies update from @PaulRobinsonFX here: https://t.co/IifHjik7gM https://t.co/R9b4jdTPnO
  • Emotions are often a key driving force behind #FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here:https://t.co/eILWbFgHRE https://t.co/lW1rqjpy0x
  • I’d like to thank my followers, I just reached 5,000 which is quite a milestone for someone that isn’t a huge fan of the platform. Thank you all very much ❤️
  • Technology stocks continue to be a source of weakness for US equities, undermining risk appetite. Meanwhile, US-China tensions simmer beneath the surface creating uncertainty. Get your #equities update from @PeterHanksFX here: https://t.co/yH8oTwT3iW https://t.co/tvfrXThyaC
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/Xi9QU3ADPF
US DOLLAR Technical Analysis: Understanding 3M LIBOR’s 7-Yr High

US DOLLAR Technical Analysis: Understanding 3M LIBOR’s 7-Yr High

2016-09-14 19:25:00
Tyler Yell, CMT, Currency Strategist
Share:

Talking Points:

  • US Dollar Technical Strategy: Another Test at Key Resistance Deserves Our Attention
  • 3M USD LIBOR 7-Year Highs May Be Indicative Of Increasing USD Strength
  • Blackout Period For Fed Ahead of September 21 FOMC Likely Pushes Up Volatility

The US Dollar has had a very volatile September. After a highly anticipated NFP that was disappointing on the headline, many had discounted action by the Federal Reserve, and the US Dollar sold off. However, institutions are not sure that’s the best play for the US Dollar, and a few funding markets are showing this to be the case as well.

Many banks are looking at the US Dollar as one of the more undervalued currencies in the G8 because of the market, as per the UST 2YR Yield is only pricing in one and a half rate hikes through 2018. Naturally, this is in contrast with the rather optimistic Federal Reserve Vice President Stanley Fisher who noted that two were possible in 2016. The Federal Reserve is now in Blackout-Mode so external markets like Fixed Income may drive USD in the short-term.

Access Our Free Q3 Dollar Outlook As The Fed Appears Cornered Regarding Effective Monetary Policy

One key development that is warranting a lot of attention away from the spot-FX market is the sharp increase in 3M USD London Interbank Offered Rate or LIBOR. Looking at the chart above, you can see the sharp rise that has taken place over the past year. The LIBOR rate is taken daily from a set of banks with the outliers canceled. The rate is used to set the unsecured borrowing costs in the London Interbank Market over different periods, and a spread is typically added to create the borrowing rate for short-term borrowing that is common in capital and money (short-term) markets.

5-Year USD 3M LIBOR Chart [USD Interbank Funding Costs]

US DOLLAR Technical Analysis: Understanding 3M LIBOR’s 7-Yr High

The increase or slope is predicted by JPMorgan to end the year at ~0.95bps, which would be another ~11% rise. Many perceive this to be important because it indicates that the lending market may be tightening up ahead of the fall season of FOMC meetings where the Federal Reserve is expected to raise rates. Such an increase may give the Federal Reserve the open door needed to hike, and this could bring the US Dollar through the key resistance of ~12,000/100 that we’ve been watching for so long.

However, if the LIBOR continues to rise, that could mean that the Fed does not need to hike to have a stronger US Dollar, which is something many hedge fund managers have been waiting on for a while now.

D1 USDOLLAR Index Chart / Sharp Reversal Appears Able To Surmount Resistance

US DOLLAR Technical Analysis: Understanding 3M LIBOR’s 7-Yr High

Find The Habits That Emerged from Successful Traders When We Studied 10’s of Millions Real Trades

The US Dollar index has come back to the first key resistance level mentioned in recent posts at 12,000. One bearish development we pointed out is that the 8/30-9/1 price action looks like a clean evening star pattern. The internal doji high is 12,027, which can also be seen as internal resistance. A break above 12,027 in the coming days would turn attention to the last level of key resistance at 12,114. If the lower parallel line (blue) fails to hold, we won’t hold our breath for either resistance level to get triggered. However, if the price remains above the lower parallel line, we could see a steady move towards 12,114 where the Bullish Pitchfork median line lies.

You’ll also not that the Ichimoku Cloud aligns with the pitchfork, which could be showing that support is building up above the US Dollar. Strong support for the US Dollar, for now, appears at 11,849, which is the 61.8% Fibonacci Retracement of the pre-Brexit to July high in the US Dollar in addition to the Andrew’s Pitchfork and Ichimoku Cloud floor. Should a break below 11,849 emerge, we will default to continue using the Bearish Pitchfork as a frame to anticipate price action.

To See How Live Clients Are Positioned In FX & Equities Click Here Now

Shorter-Term US Dollar Technical Levels for Wednesday, September 14, 2016

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours of trading.

US DOLLAR Technical Analysis: Understanding 3M LIBOR’s 7-Yr High

T.Y.

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

DISCLOSURES