US Dollar, EUR/USD, S&P 500 Talking Points
- The books are near closed on what’s been a chaotic first-half of 2020.
- The second-half of the year brings a Presidential Election as a global pandemic continues in the background.
- This webinar looked at key macro markets ahead of the H2/Q3 open, associating a series of themes that have brought impact to price action in the preceding six months.
Door Opens to H2, 2020
It’s been a climactic first-half of the year and with a highly-contentious Presidential Election on the calendar for November, as the world continues to wrestle with a pandemic, market volatility looks likely to continue.
Strangely – with hindsight it was a rather quiet Q2 for the US Dollar. Q1 did not end that way, however, as the 8.8% rip by the currency in the middle of March has left a mark on long-term charts that could make directional biases of a challenge. That March mayhem went into range-mode in April, and that range held into late-May until sellers took a swing. That bearish run went all the way down to support at 95.86-96.05, after which another, shorter-term range has developed.
US Dollar Eight-Hour Price Chart
Chart prepared by James Stanley; USD, DXY on Tradingview
EUR/USD Tests Key Support to Close Book on H1, 2020
EUR/USD opened the year around a key level at 1.1212. This is the 61.8% Fibonacci retracement of the ‘lifetime move’ in the pair. This price is confluent with another Fibonacci level of relevance at 1.1187, as this is the 61.8% retracement of the 2017-2018 major move.
Collectively, this zone has produced a number of inflections; and for the bulk of June trade, it’s helped to set support in the pair. As looked at in today’s webinar, there may be a near-term bearish break in the not-too-distant future; as the increasing frequency of support tests around this zone is coupled with lower-highs that could soon see bears take over.
EUR/USD Two-Hour Price Chart
Chart prepared by James Stanley; EUR/USD on Tradingview
S&P 500 Bounces from 3k Level, Bullish Continuation Potential
Also looked at in the early-portion of this webinar was the backdrop in US stocks. Stocks put in an amazing recovery in Q2 of this year; but the big question as we stare down the second-half of 2020 trade is whether that can continue.
From the chart, the backdrop for bullish continuation may be open. Recent price action has taken on the form of a falling wedge, and this is based around the support zone around the 3k marker. For bullish US equity strategies, the Nasdaq 100 may be more compelling; while bearish strategies may be of greater interest in the Dow Jones Industrial Average.
S&P 500 Four-Hour Price Chart
Chart prepared by James Stanley; SPX500 on Tradingview
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
