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US Dollar Price Action Setups Ahead of US Inflation

US Dollar Price Action Setups Ahead of US Inflation

2018-08-09 19:00:00
James Stanley, Currency Strategist
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The US Dollar is moving towards the 95.50 resistance that’s now turned around bullish advances on four separate occasions since mid-June. On the other side of US Dollar price action, a bullish trend-line has also been building since mid-June, and this makes for the net of an ascending triangle on the Daily US Dollar Price chart. Will tomorrow’s inflation data be enough to bring a bullish breakout to fresh highs? Inflation has been ticking-higher over the past year, and tomorrow is expected to bring a second consecutive month at 2.9%.

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US Dollar Tests Resistance Ahead of US Inflation

US Dollar strength has continued and DXY is now pushing up against the 95.53 level that’s turned around multiple topside advances over the past couple of months. With tomorrow’s inflation report on the calendar, the potential does exist for the Dollar to finally break out to fresh yearly highs, and above price action we have a batch of possible resistance around the 96.00 handle along with a Fibonacci level at 96.47.

US Dollar via ‘DXY’ Four-Hour Price Chart

us dollar four hour price chart usd

Chart prepared by James Stanley

EUR/USD Break and Go – 1.1500 Support Nearby

Going along with that topside push in USD has been another wave of weakness in EUR/USD. The pair broke below its symmetrical wedge last week, and after a bounce up to resistance at prior trend-line support, bears took over again to push prices back towards 1.1500.

If we do see a USD breakout around tomorrow’s inflation report, bearish breakouts in EUR/USD become attractive below the 1.1500 psychological level. For those that don’t trade breakouts, or don’t like to work with sitting entry orders, letting the level first break to confirm bearish potential, followed by a pullback to resistance at old support, could open the door for bearish trend strategies. This would be a similar example to how price action treated that bullish trend-line over the past week and a half.

EUR/USD Daily Price Chart: Resistance at Prior Trend-Line Support

eurusd eur/usd daily price chart

Chart prepared by James Stanley

GBP/USD with Breakdown Qualities

GBP/USD has yet to find much for support this week, and this follows the dovish rate hike out of the BoE last Thursday. Prices in GBP/USD have moved-lower each day of this week, and it appears as though a bit of support is attempting to build around 1.2850. Despite the deeply oversold nature of the current move, the potential appears to exist for even more downside. The current complication would be one of positioning given the pair’s distance away from any relevant swing highs. We looked at a few areas of relevance for lower-high resistance yesterday, and this could be greatly assisted by a move of USD weakness around tomorrow’s inflation report.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USD/JPY Trying to Find Footing for Bullish Continuation Approach

We’ve been following this one so far in Q3 as a bullish breakout to start the quarter has pulled back and, for the majority of the past few weeks price action has been reverting back to prior support around the 111.00 handle. We looked at using short-term price action to work with longer-term setups, and a bearish trend-line that’s shown up so far in August can be used to help look for a return of bullish price action.

USD/JPY Four-Hour Price Chart

usdjpy usd/jpy four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on 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 USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

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DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

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

Contact and follow James on Twitter: @JStanleyFX

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

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