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Euro, USD, JPY: Pre-NFP Price Action Setups

Euro, USD, JPY: Pre-NFP Price Action Setups

This is one of the numerous live webinars offered by DailyFX every week. If you’d like to join, sign up or even just peruse our calendar, please click here.

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- In this webinar, we used price action to look at trade setups ahead of tomorrow’s NFP release. With many trend stretched – with USD at long-term support, EUR/USD at resistance and USD/JPY ranging near multi-month highs, tomorrow could be more opportunistic for playing reactions around Non-Farm Payrolls.

- The first market we looked at was the U.S. Dollar as ‘DXY’. The Dollar remains extremely bearish, and there is little expectation for the longer-term trend to shift here. For tomorrow – a burst of strength into resistance could be attractive for short-side continuation approaches. We looked at a series of potential resistance levels in DXY yesterday, and these still apply.

- We then moved over to EUR/USD, which continues its robust bullish run. We set an analyst pick for long EUR/USD yesterday, and since then the bullish trend has continued to build nicely. This topside move has also pushed price action above a bull flag formation that’s been building in the pair, and this opens the door to bullish continuation on longer-term charts. For tomorrow – this is the most attractive pair to watch for that quick blip of USD strength. If the Dollar can catch a bid around FOMC tomorrow, this could bring EUR/USD to support, which can lead to additional bullish entries. IG Client Sentiment is currently showing -3.42-to-1, which is bullish given retail sentiment’s contrarian nature.

- We then moved over to USD/JPY, which appears rather unmoved by this recent bout of USD-weakness. USD/JPY continues to show bullish price action, and this is likely related to expectations around the Bank of Japan to remain rather loose and dovish with monetary policy. USD/JPY is a bit closer to near-term support, and this can be a favored setup for USD-strength scenarios. For tomorrow – if USD weakness shows, look for support to populate at the longer-term zone that runs from 111.61-112.40.

- To combine the two above themes – we have a near-parabolic like move in EUR/JPY. For tomorrow – a pullback to support can be attractive for bullish re-entry. Support levels of interest populate at 128.86, and 128.52.

- GBP/USD appears to be undergoing a trend-change as the Bank of England has made a rather concerted push to a more-hawkish stance. This opens the door for bullish continuation approaches, and while price action remains at an unattractive area currently – a pullback to support from 1.2809-1.2861 around NFP tomorrow could be extremely interesting for bullish re-entries.

- Gold continues to see sellers respond to resistance, we had looked at a series of levels yesterday after the longer-term support showed-up around $1,219. For tomorrow – USD-weakness could open the door to another revisit of resistance, which can open the door to short-side continuation approaches in Gold.

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

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

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