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The US Dollar Index (DXY), comprised largely of the euro, has the look of heading lower once the bounce is over; EUR/USD then higher off a support zone. AUD/USD is building a bear-flag which could soon trigger. Gold has a triangle we continue to track, directional bias dependent on its breakout…

Technical Highlights:

  • USD index to stall, EUR/USD to rally
  • AUD/USD bear-flag on the build, awaiting trigger
  • Gold price action is working towards breakout from triangle
  • FOMC today, ECB tomorrow could change landscape quickly

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USD index to stall, EUR/USD to rally

After pulling decisively off the November high, the US Dollar Index (DXY) is limping higher back towards resistance around the 94.10 level. The thinking on this end is that the index has further to go on this downturn even if only a correction of the run which started back in April.

US Dollar Index Daily Chart (Lower-high around or below 94.10)

US Dollar Index Daily Chart, looking for a lower-high

See the IG Client Sentiment page for how positioning changes can help you better gauge market direction.

In reverse of the DXY, of which the euro dominates with a 57% weighting, we are looking for EUR/USD to soon turn higher from support starting from around current levels down to ~11660. This scenario will of course be impacted by events today and tomorrow, but overall the outlook is maintained as generally bullish for now.

EUR/USD (Dip-trip into support if it holds)

EUR/USD daily chart, looking for higher prices on hold of support

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AUD/USD bear-flag on the build, awaiting trigger

AUD/USD is building a bear-flag after getting rejected from resistance. The bear-flag could continue to build in the days ahead before triggering, but should it trigger then this could be one of the USD-pairs to move lower while others move higher.

AUD/USD Daily Chart (Bear-flag building)

AUD/USD daily chart, bear-flag building

Gold price action is working towards breakout from triangle

We’ve been really focused lately on gold as price action continues to coil up into a triangle. It is situated between strong support and resistance, making it an important technical development which could soon lead to a strong move. A closing print below 1289 or above 1308 should give traders a decisive directional bias to work with.

Gold Daily Chart (Triangle breakout to dictate direction)

Gold Daily Chart, triangle breakout to dictate direction

Resources for Forex & CFD Traders

Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX