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- USD Staging a Comeback: The U.S. Dollar is re-approaching a key level at 101.53, and this is the same level that the Greenback had bounced off of last Wednesday. This is the 50% retracement of the January bearish move; and should price action pose a sustained break-above this level, the potential for bullish continuation will be more attractive. But until that break takes place, traders will likely want to remain nimble around USD without too much of a concerted bias.
- EUR/USD ran down to a key level of support with this most recent gust of USD-strength. The 61.8% Fibonacci retracement of the bullish January move resides at 1.0527. At 1.0515 we have the yearly open, and at 1.0500 we have a major psychological level. For those looking to fade USD-strength, this could be a very interesting setup to work with in the near-term.
- On the long side of the Dollar – AUD/USD has been working with a long-term batch of resistance around the .7700-handle. This zone of resistance has capped gains in Aussie for almost a full year, and with price action finding sellers around this zone, the possibility of the longer-term range could become increasingly more attractive.
- We then moved over to look at USD/JPY, which hasn’t shown much excitement over the past week; and this could be indication that the ‘rate hike jitters’ haven’t yet enveloped FX markets. Nonetheless, the longer-term setup still remains as bullish, and should price action further confirm this bullish nature with another higher-low above 112.50, the longer-term setup could become attractive again.
--- Written by James Stanley, Analyst for DailyFX.com
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