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US Dollar Rallies to Fresh Yearly High
The US Dollar finally did it: The US currency has set a fresh yearly high, trading above the same 97.70 level that had thrice turned around bullish advances in the prior six months. This level was last in play in early-March, almost six weeks ago now after the ECB announced a fresh round of TLTRO’s. That announcement pushed EUR/USD down to a fresh low of 1.1175, and USD rocketed-higher to re-test the prior double-top at 97.70. But – a day later, an abysmal NFP report was released out of the US, and the US Dollar promptly fell and continued to sell-off for the next week-and-a-half.
But now that the US Dollar has re-engaged with the 97.70 level, are bulls home free, and can prices continue to rally to fresh highs in the US currency? In this webinar, I looked at themes and scenarios on either side of the equation.
US Dollar Daily Price Chart
Chart prepared by James Stanley
EUR/USD: Bear Trap, or Bearish Breakdown?
I had looked at the short-side of EUR/USD coming into this week, waiting for prices to move down for a re-test of the big support zone that’s held the range for the past six months. The wait wasn’t long, however, as prices have already traversed ground between 1.1187-1.1212. Perhaps disconcertingly, sellers haven’t been able to make much ground below support; and given a relative lack of drive on the economic calendar, this may be more of another bear trap scenario in EUR/USD.
This can open the door for possible multi-direction strategies around EUR/USD, with long positions possible with stops set below the March low and initial targets set to the 1.1250 level. And the stop at or around 1.1175 can be coupled with a short-side entry order, so if the breakout does take place, the long can be closed along with the initiation of a fresh short-side entry.
EUR/USD Four-Hour Price Chart
Chart prepared by James Stanley
GBP/USD Breaks Out to Fresh Two-Month Load: Re-Load Possibility
I’ve been looking at the short-side of GBP/USD over the past couple of weeks, and the descending triangle in the pair has finally started to fill-in as sellers have pushed down to fresh two-month-lows.
At this point, the concern would be chasing a train that’s already left the station, and traders looking to establish bearish exposure can look to resistance potential at prior support, taken from the prior April lows up to the 1.3000 psychological level (shown in red below).
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley
USDCHF Goes Near-Parabolic
I was looking for resistance here last week. Since then, a parabolic move has pushed price action far beyond both of those points, and prices are now sitting at fresh two-year highs. At this point, I do not have aim to try to fade a near-parabolic-like move, nor do I want to chase an already mature breakout. Standing back for more clarity.
USDCHF Daily Price Chart
Chart prepared by James Stanley
USD/JPY Choppy, Continues to Shy Away from 112.00: Deeper Retracement May be Needed
While USD/CHF has gone near-parabolic to go along with this recent round of USD-strength, USD/JPY remains fairly muted. The bullish theme from two weeks ago was stopped dead in its tracks last week, and while prices remain very near that resistance, the fact that bulls haven’t yet been able to make more ground amidst a strong showing from the US Dollar, and this would indicate that prices may need to pullback before bulls might be able to finally take-out that high.
This places emphasis on support potential in zones from 111.13-111.28 and, a bit deeper, from 110.75-110.86.
USD/JPY Four-Hour Price Chart
Chart prepared by James Stanley
AUD/USD: Range Support Soon to Come Back into Play?
Going along with this morning’s rush of USD-strength has been a bearish move in AUD/USD, as prices pushed back-below the .7100 handle. Prices are now getting very close to the ‘s1’ zone from the range formation, and that runs from .7050-.7075. This comes with the potential for stops below the .7000 big figure, which currently marks the three-month-low in the pair and looking for prices to revert back towards range resistance zones at .7125-.7150 and .7185-.7206.
AUD/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
