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USD: Bullish Reversal or Retracement in a Bearish Trend

USD: Bullish Reversal or Retracement in a Bearish Trend

Talking Points:

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-In this webinar we used price action to analyze technicals in key markets after this Friday’s out-sized move of strength in the U.S. Dollar on the heels of FOMC commentary that provided a more hawkish outlook for future rate hike plans.

- We first looked at USD/CHF as a USD-strength continuation play. Swissy has been trading cleanly with a couple of key Fibonacci retracement, and with price action currently finding short-term resistance at .9834, this can be used as a basis level to investigate additional long positions. Should this bout of resistance hold, traders can look to buy a ‘higher-low’ after prices recede from current levels. If price action does break through, .9834 could become the next area to look for that next ‘higher low’ outside of current price action.

- We then moved on to Gold, where continued USD strength could be really helpful in the effort of longer-term bullish entries in Gold; under the expectation that the Fed will eventually relent from their rate-hike plans. This could be one of the more attractive markets in the event of USD-weakness with eyes on the longer-term setup in Gold prices.

- After Gold we moved over to the Yen, which has seen a bout of weakness start-up after BoJ Governor Kuroda’s remarks at the Jackson Hole Economic Symposium. This implied the potential for even more Japanese stimulus, and if married up with a strong Dollar being driven by a hawkish Fed, this could present monetary divergence between the representative Central Banks that could continue driving the pair higher. Long USD/JPY could be an attractive way to look at USD-strength continuation while also looking for the Bank of Japan to ramp up stimulus efforts in the coming months.

--- Written by James Stanley, Analyst for

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