US Dollar Talking Points:
- The US Dollar has broken out to fresh three-week-highs as looked at this morning.
- This keeps open the possibility of USD fades against the British Pound and Canadian Dollar, as looked at below.
- 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.
The US Dollar is breaking out to fresh three-week-highs today and this comes as the risk-on trade has been showing in full bloom. USD/JPY has jumped up to a fresh five-month-highs and the S&P 500 has set another fresh all-time-high, illustrating that ‘feel good’ scenario that’s taken-hold of global markets in the wake of last week’s FOMC and this week’s thawing of US-China tensions.
Will it continue, that’s the big question and at this stage there is little to no evidence to the contrary. In this webinar, I looked at a couple of different scenarios around the US Dollar, looking to fade this strength against strong currencies such as the British Pound or Canadian Dollar while also looking to work with that strength against weaker counterparts such as the Swiss Franc or, possibly, the Australian Dollar.
I had looked into the US Dollar earlier today, looking for a short-term bullish breakout as an ascending triangle had built. The first target at 98.21 has already come into play, and follow-through targets could be sought around the 98.33-98.50 zone on the chart.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; US Dollar on Tradingview
GBP/USD: Pullback to Support on BoE
This morning’s Super Thursday at the Bank of England was a bit more dovish than expected as two members voted for a rate cut. This helped to push the pair down to support at the 1.2800 handle but, even as the US Dollar has broken out to fresh highs, buyers have helped to hold the bid around this key area on the chart in Cable. This keeps the door open for bullish scenarios in the pair.
GBP/USD Two-Hour Price Chart
Chart prepared by James Stanley; GBPUSD on Tradingview
USD/CAD Holds Resistance as USD Breaks Out
Also with potential on the short-side of the US Dollar is USD/CAD. While USD was breaking out to fresh highs today, USD/CAD has stayed inside of last week’s swing-high around the 1.3200 level. If USD does push back in a bearish direction, the short-side of USD/CAD could become attractive again, looking for re-tests of 1.3132, 1.3065 and then the 1.3000 psychological level.
USD/CAD Eight-Hour Price Chart
Chart prepared by James Stanley; USDCAD on Tradingview
AUD/USD: Bulls Persistence May Bring a .7000 Re-Test
At this point, the bearish trendline in AUD/USD is still helping to hold the highs in the pair. But even as USD-strength began to show, AUD/USD has been persistently bullish and price action appears poised for another re-test of that trendline and, perhaps even, a topside break. Above this trendline projection is the .7000 big figure which could be looked to as a secondary area of resistance in the pair.
AUD/USD Daily Price Chart
Chart prepared by James Stanley; AUDUSD on Tradingview
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
