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US Dollar Price Action Setups Around FOMC

US Dollar Price Action Setups Around FOMC

2018-11-08 20:19:00
James Stanley, Currency Strategist
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US Dollar Price Action Setups Around FOMC

Today brought the last non-live rate decision out of the FOMC, as December is a quarterly meeting bringing updated projections along with an accompanying press conference; and once we get into 2019, every meeting will be ‘live.’ Today’s rate decision brought minimal changes to the bank’s statement from September when the FOMC hiked rates by 25 basis points. The Fed did note continued growth in household spending while fixed business investment has moderated from its rapid pace earlier in the year. In this webinar, I looked at technical setups around the US Dollar ahead of FOMC, and below I update those charts with post-FOMC price action.

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US Dollar Extends Trend-Line Bounce After FOMC

The US Dollar had a really strong month of October with a bullish trend that got kick-started around the Fed’s last rate decision in September. November, however, has brought a different tone as the currency topped out ahead of the November open had spent much of the past week selling off until support began to show yesterday morning.

That support in the US Dollar showed up at a key area, as the trend-line produced by last month’s bullish run in the Dollar helped to hold yesterday’s lows, and that bounce has continued through today’s FOMC rate decision.

US Dollar Four-Hour Price Chart

us dollar usd four hour price chart

Chart prepared by James Stanley

EUR/USD Bears Come Back

That pullback in the US Dollar in November helped to arrest another decline in EUR/USD after the pair failed to test the 1.1300 level that came into play in August. The resistance zone that I was following from 1.1448-1.1500 has come into play a couple of different times over the past week. The Friday high came in off of the lower-portion of this zone, while yesterday’s swing-high came-in at the top-side of the zone at 1.1500.

As of this morning’s Market Talk, the pair was clinging on to short-term bullish potential. But, given the reaction after FOMC, that topside potential is no longer looking likely, and the door may soon be re-opening to a 1.1300 re-test in EUR/USD, and buyers may not be able to hold this up a third time.

EUR/USD Four-Hour Price Chart

eurusd eur/usd four hour price chart

Chart prepared by James Stanley

GBP/USD Pulls Back to Potential Support

The first week of November saw a very bullish British Pound to go along with that USD-weakness, and in short-order the pair jumped back above the 1.3000 level. I had looked into the pair in yesterday’s technical article entitled, GBP/USD: Cable Bulls Rush Back to the Bid, Find Fibonacci Resistance. In that piece, I looked into two different zones of potential support. The first of those is now coming into play, taken from the 61.8% Fibonacci retracement of the bearish move in the second-half of October; and a bit lower is a secondary zone of interest that runs from the 50% marker of that move up to the 1.3000 psychological level.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

AUD/USD Pulls Back to Prior Resistance

AUD/USD put in a strong showing so far in November, and this comes after the pair spent a large portion of October building-in support above the .7000 big figure. This was my preferred avenue for USD-weakness last week, and the first week of November brought a strong bullish move into the pair. Perhaps too strong, as the move came in rather quickly. But, as I had discussed earlier this morning, the pair was feeling overbought and due for a pullback, and given that post-FOMC strength, that is what we have.

Prices are now testing support at an area of prior resistance, taken from the psychological level at .7250. A bit deeper, around .7180-.7205 is a secondary zone of interest derived from a pair of long-term Fibonacci levels.

Of note – tonight brings a rate decision out of the RBA, so potential for volatility remains high here.

AUD/USD Four-Hour Price Chart

audusd aud/usd four hour price chart

Chart prepared by James Stanley

NZD/USD Pulls Back After Failed Test at .6820

Yesterday brought a RBNZ rate decision to markets, and this helped to produce an interesting backdrop for NZD/USD. This was another pair that I’ve been following for short-side USD setups, and this was part of this week’s FX Setups. The bullish theme in NZD/USD ran rather cleanly through yesterday’s RBNZ rate decision, including a quick wick up to a key level of .6820. Buyers were unable to hold the move and prices soon pulled back into a range. But, as I warned, this setup might need a deeper pullback before the bullish trend is ready for continuation, and the first area that I was looking too may soon come into play around .6725.

NZD/USD Eight-Hour Price Chart

nzdusd nzd/usd eight 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 Q4 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.

Forex Trading Resources

DailyFX offers an abundance 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

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