FX Price Action Setups in EURUSD, USDJPY and USDCHF
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US Dollar Drops to 96.47 Fibonacci Level
The US Dollar’s topside run has taken a pause, as prices have pulled back to a fresh weekly low on the heels of some comments from FOMC Member, Loretta Mester earlier this morning. Ms. Mester indicated that balance sheet reduction could be put on hold if need-be, and shortly after these comments made their way through markets the US Dollar had started to soften in its topside run. The week is young for USD drivers, however, as tomorrow brings meeting minutes from the January FOMC rate decision and Thursday brings US Durable Goods orders. There is also a continued outlay of Fed-speak this week, with Mr. James Bullard providing comments tomorrow and Friday, and Mr. Rafael Bostic speaking about the economic outlook and monetary policy on Thursday.
In the US Dollar, prices are re-testing the 96.47 Fibonacci level, which is the 23.6% retracement of the post-Election run in the Greenback.
US Dollar Four-Hour Price Chart
EURUSD Bounces From Support Zone
For the past three months, EURUSD has held into a fairly consistent range, with support showing from 1.1215-1.1300 while resistance has set-in around 1.1448-1.1500. Last week saw prices move into the support side of that zone, and after virtually all of that period saw back-and-forth price action, buyers have finally budged up to a fresh weekly high. This can keep the door open for the longer-term range in the pair as looked at in this week’s FX Setups.
EURUSD Eight-Hour Price Chart
GBPUSD has put in a very big day as prices have jumped back-above the 1.3000 psychological level. And while I was looking at bearish potential in the pair coming into this week, that idea no longer looks attractive after buyers made their mark. At this stage, traders will likely want to continue keeping exposure in GBP-pairs limited, as a very uncertain backdrop around Brexit can continue to evoke sharp moves. On the support side of the pair, the 1.3000 area could be of interest for those looking at bullish strategies; while resistance from 1.3106-1.3117 could remain of interest for reversal potential or, for targets on bullish positions.
GBPUSD Two-Hour Price Chart
USDJPY Holds Strength Even as USD Tips Over
Similar to what was seen last week, USDJPY bulls have largely held the line even as a reversal in USD has shown. This indicates that Yen-weakness remains as an attractive theme, particularly for those looking at bullish USD-exposure.
The big question around the pair at this point is whether bulls are in a spot where they can push, or whether a deeper retracement might be needed. Coming into this week, I focused-in on that prior zone of resistance for the next potential higher-low support test. That zone runs from 109.67-110.00 and, as yet, it hasn’t been tested for support since last week’s topside breakout.
USDJPY Four-Hour Price Chart
On a shorter-term basis, it appears as though a bear flag formation is building on the hourly. This could provide that deeper support test should the formation play-out.
USDJPY Hourly Price Chart
USDCHF Back to Parity
I had looked at reversal potential in USDCHF last week as the pair re-engaged with a notable level around 1.0096. That resistance has since held, and prices have perched back to the parity level in the pair. This can keep the door open for a deeper reversal; and for those with shorter-term strategies, a nearby area of prior support turned resistance can re-open the door for bearish themes in the pair.
USDCHF Two-Hour Price Chart
USDCAD Retains Bearish Potential
USDCAD continues to carry an element of congestion after last week’s topside push; but the fact that a bearish trend-line has continued to help hold resistance can keep the door open for bearish strategies in the pair. The fact that USDCAD wasn’t more reactive to this morning’s USD-weakness, however, should be noted, as this may not be the most amenable venue for trading pure USD-weakness.
USDCAD Four-Hour Price Chart
AUDUSD Moving Back Towards Key Resistance .7185-.7206
Last week when I looked at AUDUSD, the pair had worked between short-term support and resistance levels. I had opined that the pair first needed to pose a move before strategy could be derived, and that scenario may be nearing: AUDUSD has pushed up towards a key area of potential resistance. That zone runs from .7186-.7205; and a re-emergence of sellers in this zone re-opens the door for bearish strategies in the pair.
AUDUSD Hourly Price Chart
NZDUSD Testing Above Big Zone
NZDUSD has a key zone that prices are currently testing above; and the way that traders treat this move may provide clue for the next directional move in the pair. Should prices break down to show a daily close below .6870-.6877, the potential for reversals becomes attractive. Alternatively, should prices push down to this zone to find short-term support, the door opens for shorter-term bullish continuation strategies. If neither of the above happens, patience is the name of the game until the setup cleans up.
NZDUSD Hourly 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.
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--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX