US Dollar Hits Support, Euro Resistance; DXY, EURUSD Charts & More
The U.S. Dollar Index (DXY) touched a trend-line extending higher from June, which could induce a bounce in the short-run, but downward momentum could keep the slide going if buyers don’t quickly show up. The Euro is running in reverse and while it is on shaky ground in terms of trend and tone, it could continue a bit higher before a strong resumption of the down-move can continue. JPY made a big move as stocks took a hit, puts it in an extended state in the near-term; waiting to see how the market responds before drawing further conclusions about the next move.
- U.S. Dollar Index (DXY) trading at minor t-line
- EURUSD has trend/tone against it, but could trade a bit higher
- JPY pairs oversold on stocks, watching the response
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U.S. Dollar Index (DXY) trading at minor t-line
The U.S. Dollar index has been on its heels the past few sessions, with it trading on a minor trend-line off the June low. This could be enough to put in a bounce, but downward momentum was strong which could result in some residual selling soon. Should the bounce prove weak, renewed weakness could take the DXY down to the 200-day/96.70 area.
US Dollar Index (DXY) Daily Chart (small t-line support)
EURUSD has trend/tone against it, but could trade a bit higher
The Euro has recovered strongly from a one-year underside trend-line where it posted a reversal candle on Thursday. The upside so far has been swift, a minor pullback may result in a continuation to higher levels. That may be about it though, as trend and tone are broadly against EURUSD. On further strength watch the 11300-area where price and 200-day resistance lie.
EURUSD Daily Chart (trend lower, but may go a bit higher first)
JPY pairs oversold on stocks, watching the response
JPY has seen a surge in buying as the Trade War once again heats up and spooks risk assets, namely stocks. Some of the cross-rates are most oversold at this time, with AUDJPY trading around the flash-crash lows in January and levels from 2010-16. Tough spot for new shorts, existing shorts may want to consider buttoning up risk parameters. Would-be longs have support, but the bounce may only prove counter-trend in nature and thus at risk of failing relatively quickly.
AUDJPY Daily Chart (Extended into Long-term support)
GBPJPY has been hammered real good, with it now extending into a weekly trend-line from the 2012 low. Like AUDJPY we are at a big long-term line-in-the-sand. Sterling-yen may bounce with the help of oversold conditions and long-term support. Same as with the other JPY pairs, shorts at risk of retracing while longs may prove difficult in a counter-trend environment.
GBPJPY Daily Chart (Extended into support area)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.