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

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

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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

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