FOMC, NFP, U.S. Elections to Keep USD in Spotlight
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- The next week brings significantly elevated risk of volatility with tomorrow’s FOMC meeting, Thursday’s ‘Super Thursday’ batch of announcements out of the Bank of England, Friday’s Non-Farm Payrolls and then U.S. Presidential elections taking place next Tuesday. While many newer traders will look at such an environment opportunistically, traders should be far closer to fear rather than greed here.
- We started off by taking a ‘big picture’ look at the U.S. Dollar, which was incredibly strong until Friday of last week, when news of the FBI re-opening the investigation into Hillary Clinton’s emails began to bring the Greenback lower. While many are likely asserting that this bout of USD weakness is towards an individual candidate, the more likely explanation is that after markets had bought USD in anticipation of a rate hike from the Fed in the next couple of months, uncertainty in the environment has brought questions to whether or not that the Fed will hike, and that’s the more likely culprit for this recent bout of USD weakness.
- We looked at USD/CHF as a candidate for continued USD-weakness. For more information behind that setup, please check out our article from yesterday entitled, Pin Bar at Range Resistance. Swissy has built-in to a fairly strong range over the past five months, and a recent inflection off of resistance opened the door for a short-side entry.
- We then moved on to look at USD/JPY as a long-USD candidate. We’ve been discussing this one for a while now, and with the U.S. Dollar in the midst of a retracement, top-side re-entries may make themselves available against the Yen in the coming days. We had discussed this setup in this morning’s Market Talk article entitled, A Sliding Scale of Weakness in Yen, USD and Oil.
--- Written by James Stanley, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.