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US Dollar Price Action Setups Ahead of Non-Farm Payrolls (NFP)

US Dollar Price Action Setups Ahead of Non-Farm Payrolls (NFP)

James Stanley,
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Tomorrow brings February Non-Farm Payrolls out of the United States, carrying an expectation for 205k jobs to have been added last month. This comes after tonight’s Bank of Japan rate decision, along with an interesting day of volatility in EUR/USD following this morning’s ECB policy statement. In this webinar, we looked at price action setups around the US Dollar.

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EUR/USD Rip and Dip; But is the Bullish Trend Dead?

The big item from today has been Euro volatility after this morning’s European Central Bank rate decision. The ECB made no actual changes to policy, but did tweak the statement that was released at 7:45 AM ET, removing a key phrase that had previously indicated that more QE could come online if needed. The removal of this phrase was construed in a bullish manner as the Euro popped after the release, but that strength quickly dissipated as Mr. Draghi began to speak at the accompanying press conference, and has largely continued ever since. I’m looking at the bigger picture bullish trend with aspirations of continuation, looking for some element of support to show at any of: 1.2281, 1.2213 or 1.2167 before even thinking about topside plays.

GBP/USD Heads-Lower After Short-Term Trend-Line Break

We looked at the short-side of Cable yesterday, and that setup has filled-in a bit as prices broke-below the near-term bullish trend-line that we were following. This keeps the pair interesting for bearish scenarios, particularly for long-USD approaches. Lower-high resistance could be sought out around 1.3837 or 1.3865; all in the effort of getting stops above the prior swing-high at 1.3930.

USD/CHF Breaks out to Six Week Highs After Build of Bullish Behavior

We had looked at a trend shift in USD/CHF yesterday, and the pair’s behavior today is notable in the fact that USD/CHF is making fresh highs, currently testing above the .9500 psychological level; and meanwhile EUR/USD remains above the March lows. This indicates the prior element of Franc strength that had built-in such a clean down-side trend is starting to wane, and this can keep the door open for bullish continuation. I shared, buying in-front of a major psychological level can be a daunting way of looking to add exposure, so we looked at a couple of areas of interest to seek-out that shorter-term higher-low.

AUD/USD Build of Higher-Highs, Lows

This was previously my favored long-USD candidate, but as we’ve seen a build of support around .7710-.7750, this pair may be a bit more accommodating for short-USD scenarios in the near-term, as the past week has showed diminished motivation from sellers while we test towards these lows around the .7750 psychological level.

NZD/USD with Bearish Potential

We’ve been following Fibonacci resistance on the pair at .7335, as this price has had a proclivity to help produce resistance on the monthly chart going back to 2016; and this is part of a longer-term range that goes back for almost two full years. Price action spent most of February trying to leave this resistance behind, but an influx of sellers has helped to keep temper on that prior bullish move. On a shorter-term basis, we’ve seen prices scale-back to .7200, and we looked at playing short-term bearish continuation in the effort of filling in that longer-term range in the pair.

USD/JPY Testing Support Ahead of BoJ

Before we get to NFP tomorrow, we have the Bank of Japan. The Yen has seen a tonality change so far in 2018, and this is something that may continue. This scenario appears very similar to what happened around the Euro last year, as stronger growth and inflation drove strength into the currency, as market particpants were trying to read the tea leaves to get in-front of any potential tightening action that may happen. That tightening still hasn’t happened, and we just got one of the initial semblances of it taking place at some point later in the year at this morning’s ECB rate decision.

In Japan – inflation is rising, and Yen strength has become a bit more pronounced; leading to the comparability of our current scenario in Japan to last year’s situation around the Euro. USD/JPY is testing some long-term support levels, derived from the support side of a symmetrical wedge along with the 23.6% retracement of the 2015-2016 major move.

EUR/JPY for Yen-Strength Scenarios

The pair(s) that we’ve been following for Yen-strength are away from the US Dollar, as the Greenback appears to have its own themes in process at the moment. EUR/JPY, however, has spent most of February showing clues of reversal, and that’s been followed-thru thus far in March as prices have perched down to fresh five month lows. We looked at manners of playing bearish continuation in the pair, as today’s daily bar is currently showing an evening star reversal pattern off of a key zone of resistance.

To read more:

Are you looking for longer-term analysis on the Euro, the British Pound or the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on our EUR/USD, GBP/USD, USD/JPY, AUD/USD and U.S. Dollar pages. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

--- Written by James Stanley, Strategist for

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