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Preemptive Rate Hike Threats Driving USD

Preemptive Rate Hike Threats Driving USD

2016-10-11 18:58:00
James Stanley, Strategist
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Talking Points:

- In this webinar, we used price action to look at the recent top-side breakout in the US Dollar. We discussed the driver for this breakout at length, and we also touched on the topic this morning in the article, Prospect of Preemptive Rate Hikes Continue to Drive the Dollar.

- The first market that we looked at was USD/JPY, as price action is threatening to move into a bullish state should the September swing-high be taken out at 104.31. Should this take place, we’d have a ‘higher-high’ to match up with the series of higher-lows that have been printing for the past three-and-a-half months; and this could lead-in to a continuation of the top-side move higher.

- We then moved on to EUR/JPY to look at another Yen-pair that could have continuation potential. EUR/JPY has moved down to an interesting level of support with a projected trend-line intersecting with a Fibonacci level that had previously provided resistance and then support. We discussed this setup in our tech piece last week entitled, Six Month Trend-Line Gives Way.

- After EUR/JPY, we looked at GBP/USD. This is a market that appears to be still driven by panic, and trading in such environments can be dangerous. The biggest complication in looking for additional short positions is cost of risk. There aren’t any nearby swing-highs to use for stop placement on the 4-hour or above charts, so the potential risk may be difficult to offset.

- We then moved on to Gold. Gold is another market in the midst of a ‘panic-like’ move. There’s a long-term support level at $1,200; and should a higher-low develop above this, there may be a reversal play available. But for now, USD strength is all the rage, and Gold bulls will likely want to remain cautious until something changes.

- We then looked at NZD/USD. There’s a potential support zone from .6945-.7000 that could be very interesting should price action run that far.

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

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