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US Dollar Price Action Setups: EUR/USD, USD/CNH, NZD/USD

US Dollar Price Action Setups: EUR/USD, USD/CNH, NZD/USD

2018-11-15 20:12:00
James Stanley, Strategist
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FX Price Action Setups in EUR/USD, USD/CHF, NZD/USD and USD/CNH

It’s been a climactic past couple of days across global markets and a number of themes remain that can continue to prod volatility across global markets. In the optimistic department, US equities have started to bounce after a troubling week of price action after last week’s FOMC rate decision. The US Dollar has continued to find support around the 97.00 level while both EUR/USD and GBP/USD retain some element of bearish allure. I looked into both, as each should be approached a bit differently given their competing backdrops. And elsewhere, the door appears open for USD-weakness in pairs like USD/CHF, USD/CNH, AUD/USD or NZD/USD, which is currently working on fresh three-month-highs. In this webinar, I parsed through each of these Dollar pairs along with a few others in the effort of devising strategy over the coming days.

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US Dollar: The Importance of Picking the Proper Spots

The US Dollar is holding on to support around the 97.00 level after the early-November ramp pushed up to fresh yearly highs. While the Fed has certainly been a factor here, as the bullish trend-line began around the September FOMC meeting and last week’s rate decision helped the currency push up to those fresh highs, a portion of this strength appears to be emanating from risk aversion; largely out of Europe and the UK as both EUR/USD and GBP/USD retain some bearish qualities. Elsewhere, other pairs look more accommodative for USD-weakness, and that keeps the door open for taking a bifurcated approach on the US Dollar, looking to buy the currency against weak markets while selling it against currencies that have been seeing signs of strength, such as the New Zealand Dollar.

US Dollar Four-Hour Price Chart

us dollar usd four hour price chart

Chart prepared by James Stanley

EUR/USD Holds Lower-High Resistance After Earlier-Week Breakout

Italy did not make many revisions to the budget that they were supposed to resubmit to the European Commission. The question at this point is what the EC does in response, so it appears as though we’re simply waiting for the next shoe to drop. On the Italian side, it does not look as though the recently-elected government is yet ready to bail on their campaign promises. On the European Commission’s side of the matter, rejecting a budget from a sovereign state is rather unprecedented, and Italy openly flaunted the EC’s request to revise the budget to come within the framework that Brussels wanted. The next step here would be penalties, but this may set up for an even more acrimonious backdrop that could create even more risk aversion.

EUR/USD Four-Hour Price Chart

eurusd eur/usd four hour price chart

Chart prepared by James Stanley

GBP/USD: Dismayed by Brexit Mayhem

Short-term price action in the British Pound has been pretty dangerous over the past 24 hours. Yesterday’s headlines around Brexit created two-sided moves that were very sharp and quite unpredictable. The closest thing to a trend that’s been seen here was the earlier morning sell-off on news that Brexit minister Dominic Raab was going to resign. This helped to push Cable down towards yearly lows which, at this point, remain. The short side of this feels a bit stretched: The more attractive thing to look for now might just be higher low support on a failed test of those lows to open the door for bullish reversals. Outside of that, prices are fairly far away from any reasonable areas to manage risk on shorts, so we may need a pullback before the door can start to re-open for bearish strategies here.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USD/CHF: Reversal Potential After Two-Year Highs

USD/CHF was one of the markets looked at in this week’s FX Setups of the Week. The setup was largely looking to catch a top around two-year highs in a big area of resistance. The re-emergence of USD-weakness over the past couple of days has helped to push prices a bit-lower off of those highs, and the door can remain open for short-side setups here, looking for a deeper reversal of prior strength.

USD/CHF Two-Hour Price Chart

usdchf usd/chf two hour price chart

Chart prepared by James Stanley

USD/CNH Topping Potential Near a Very Obvious Level

The multi-year high in USD/CNH is at 6.9875. The pair put in a very strong up-trend from March of this year to quickly return to that level. I started to look at this setup coming into this week in a similar vein as USD/CHF, looking to fade a stretched Dollar in a market that’s hovering near very noticeable highs. The setup is starting to fill in and prices are nearing the initial target of 6.9000; but given the pace of that earlier-year up-trend, the door would appear open for greater bearish potential.

USD/CNH Daily Price Chart

usdcnh usd/cnh

Chart prepared by James Stanley

AUD/USD Re-Approaches Monthly Highs

This is another USD-weakness setup, but this one I’ve been following for a while as it was the deductive inference from October that started to make it interesting. While USD was ripping against many markets, AUD/USD put in a respectable hold of support above the .7000 big figure. Coming into November, buyers finally made a stand, and prices pushed above the 2018 bearish trend-line in the pair. Since then, buyers have continued to push, and prices are re-approaching the monthly high that came into play last week. In the webinar, I went down to the hourly chart to look at how the move could still be worked with on shorter time-frames.

AUD/USD Four-Hour Price Chart

audusd aud/usd four hour price chart

Chart prepared by James Stanley

NZD/USD Fresh Three-Month Highs

Similar story here: While USD-strength was quite noticeable in October, NZD/USD put in a respectable hold of prior support through the bulk of the month. As we came into November, buyers started to make a more noticeable push and, at this stage, the pair has jumped up to fresh three-month-highs. The door appears open for bullish continuation here, and this will likely remain as one of the more attractive short-USD candidates in the near-term.

NZD/USD Eight-Hour Price Chart

nzdusd nzd/usd eight hour price chart

Chart prepared by James Stanley

DJIA: Dow Jones Bounce from 25k, Can Buyers Hold the Line?

It’s a rather pensive backdrop in US stocks after the early-November recovery started to fall flat around last week’s FOMC rate decision. Selling pressure remained in the week after, and it wasn’t until today that a bit of support began to show up. I discussed that earlier this morning in the article, DJIA: Dow Jones Tests 25k as Post-FOMC Sell-Off Extends.

Dow Jones Two-Hour Price Chart

DJIA Dow Jones Two 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

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

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