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USD Price Action Setups Post-NFP, Yellen

USD Price Action Setups Post-NFP, Yellen

2016-06-07 19:12:00
James Stanley, Strategist
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Talking Points:

- This is an archived webinar from June 7th, 2016, hosted over Gotowebinar. If you’d like to sign up for our next Price Action webinar on Thursday June 9th, we’ll be focusing on CAD, Oil and Equities Price Action setups; please click here to register.

- The focus-point for today’s webinar was the US Dollar after an abysmal NFP report last Friday extinguished hopes for a rate hike out of the Fed in June. And while speaking yesterday in Philadelphia, Chair Janet Yellen further depressed those rate hike hopes as she said that new questions have been raised in pertinence to economic outlook on the back of the most recent jobs numbers (speaking to the last two months’ NFP reports); and this was largely inferred as more Fed dovishness on the horizon.

- One market that’s visibly shown that USD-weakness of recent has been in the British Pound; but as we discussed on today’s webinar, the upcoming Brexit referendum is likely to keep the Cable volatile until, at least, the referendum takes place in two weeks. Traders can attempt to adjust to this heightened volatility by looking for even more aggressive risk-reward ratios, and we looked at a series of long-term Fibonacci levels that can be used for such an approach (also discussed in our most recent GBP/USD Technical Analysis article).

- We also looked at EUR/USD and the prospect of a legitimate change in trend taking place on the back of this most recent bout of USD-weakness. If we are, in fact, looking at an extension in the USD down-trend, top-side EUR/USD setups could become attractive. We’ve just ran up to a new level of resistance, which happens to be 50% of the most recent major move, and traders can use this level to base forward-looking approaches; i.e., let price action break resistance to prove top-side sustainability, and then look to buy support at or around old resistance.

- We then looked at the Gold market, which went on an absolute ride throughout the month of May as the Fed had talked up the prospect of a rate hike in June. If we’re back in the ‘looser for longer’ stance that markets had welcomed back in February of this year, Gold may continue to get a boost. But if USD –strength comes back, then we may be in for a pretty aggressive reversal. Near-term, Gold prices are finding resistance at $1,245.83, which is the 23.6% Fibonacci retracement of the most recent major move. We discussed the current price action setup in Gold in yesterday’s Technical Analysis piece entitled, Finding Resistance at Old Fibonacci Support.

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

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