US Dollar Outlook:
- The US Dollar has put in a stark reversal to start Q4 trade.
- The Fed will be in the spotlight for rate decisions in October and December.
- DailyFX Forecasts are published on a variety of markets such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.
Its been a strong contrarian move to start Q4 across FX markets. The US Dollar rode a full wave of strength in the final week of Q3 to push up to fresh two-year-highs as looked at in this morning’s piece. But a manufacturing ISM print that was released earlier today printed in contraction territory for the second consecutive month, likely owed to USD-strength hitting US manufacturing, and this started a strong sell-off in the US Dollar. That theme hastened shortly after when President Trump remarked on the Fed being out-of-touch on the matter, allowing the US Dollar to get strong while most other developed economies are actively driving weakness into their own currencies.
Perhaps most interesting has been the reaction in US equities. The bullish trend there stalled after the Fed’s second rate cut of 2019 in September. As I had looked at a couple of weeks ago, topside no longer looked as attractive and since then the short-side swing has filled in fairly well. In this webinar, I looked at setups across the US Dollar in the attempt of deducing which currency pairs may be most attractive for themes of both USD-strength and USD-weakness.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; US Dollar on Tradingview
EUR/USD Tests Trendline Resistance
Going along with that pullback from two-year-highs in the US Dollar, EUR/USD has bounced from fresh two-year-lows. The pair is currently testing trendline resistance, although this could still be a difficult place to stage bearish approaches on the pair. Potentially more attractive is a prior area of support/resistance around 1.0965 that could allow for stops north of the 1.1000 handle.
EUR/USD Four-Hour Price Chart
Chart prepared by James Stanley; EURUSD on Tradingview
GBP/USD Bounces but Can Bulls Re-Take Control?
I followed the long side of GBP/USD throughout September and the pair showed breakdown during this morning’s European session. Price action has bounced and resistance is now showing in that prior zone of support.
GBP/USD Two-Hour Price Chart
Chart prepared by James Stanley; GBPUSD on Tradingview
USD/CAD for USD Weakness
While the US Dollar was surging into the end of Q3, USD/CAD continued to respect resistance, highlighting the fact that the Canadian Dollar was fairly strong, as well.
USD/CAD Four-Hour Price Chart
Chart prepared by James Stanley; USDCAD on Tradingview
USD/JPY Reverses at 108.47, Again
Also of interest for USD-weakness is USD/JPY, and this also carries a risk aversion item of interest. The pair reacted to the support looked at last week around 107.00 and bounce all the way up to that same Fibonacci level that helped to set the September high at 108.47. This can keep downside in focus on USD/JPY.
USD/JPY Four-Hour Price Chart
AUD/USD: Ready for a Break?
On the long side of the US Dollar, AUD/USD remains attractive. I had looked at the short-side of the pair over the past few weeks and prices pushed down below the .6700 handle last night. At this point, resistance potential lurks at the ‘flash crash’ swing low from earlier this year, taken from around .6743 on the chart.
AUD/USD Two-Hour Price Chart
Chart prepared by James Stanley; AUDUSD on Tradingview
USD/CHF for USD-Strength
To read more:
Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or 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
