Market Outlook

Our daily market outlook articles help you stay up to date with the latest news and analysis on leading currencies, indices and commodities across European, US and Asian markets.

View More

US Dollar Price Outlook in EUR/USD, AUD/USD

Price action and Macro.

Connect via:

Never miss a story from James Stanley

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to James Stanley

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

US Dollar, EURUSD, AUDUSD Price Outlook Talking Points

  • The US Dollar has put in a month of transition so far in June, breaking-lower around a dovish twist at the Federal Reserve. The big question is whether this theme can continue to drive through the Q3 open next week.
  • The US Dollar is testing a support level at two-month-lows around 96.03. For traders looking at a bounce in USD, the short-side of AUDUSD can remain as interesting. For traders looking at a continuation of US Dollar-weakness, the topside of EURUSD can remain as interesting as the pair makes a move towards the 1.1400 psychological level.
  • 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.

US Dollar Drop Continues After FOMC

Last week was big for the Greenback, as the US Dollar sank below a number of support levels on the heels of a dovish twist at the Fed. After carrying bullish overtones for the better part of the prior thirteen months, the US Dollar came into Q3 with an ascending wedge formation. Such a backdrop will often be approached with the aim of bullish continuation, and that led into breakouts in April and May as the US Dollar pushed up to a fresh yearly high at 98.33. But, the month of May was marked for change, as an outsized equity sell-off started to create worry at the Fed, and as the door opened into June, FOMC Chair Jerome Powell offered some supportive comments that gave the appearance that the bank may be nearing a dovish posture for the months ahead. In short order, the US Dollar folded-lower as equities began to trend-up again.

At this point, the US Dollar has taken-out a number of key support levels. As looked at earlier in the month, the lack of enthusiasm from buyers near resistance led to the build of another formation; this time a rising wedge. Such a backdrop will often be approached in the opposite manner as the setup looked at above – as traders look for the lack of enthusiasm near resistance to, eventually, play-through for a break of support. That happened last week as USD fell out of the bottom of that formation.

US Dollar Weekly Price Chart

us dollar usd weekly price chart

Chart prepared by James Stanley

The US Dollar is now testing a key level at 96.03, which is the 50% marker of the 2017-2018 sell-off. A bit lower is a prior swing-low around 95.68, followed by a big level of prior support around the 95.00 psychological level. Below that, a big confluent zone of Fibonacci support potential exists from 93.86-94.30.

For those looking to sell, a pullback to find resistance at the Fibonacci level of 96.47 can open the door for such a scenario. With such a rigid level of prior support being taken-out, this can be an interesting level to continue to watch for price action to revisit.

US Dollar Daily Price Chart

us dollar usd daily price chart

Chart prepared by James Stanley

EURUSD Nears 1.1400, Fresh Two-Month-Highs After Dovish Draghi

Coming into the month EURUSD was one of my favored spots to look for short-side USD exposure. And this wasn’t borne from any particular optimism around the Euro-zone as much as the length of time that the bearish side of the pair has been in-favor. Perhaps most importantly, the past few months have brought a variety of bearish triggers into the spotlight but, to date, Euro bears haven’t been able to make much of a mark. This produces a backdrop ripe for short-squeeze scenarios which is what appears that we have in-front of us. EURUSD is climbing to fresh two-month-highs, making a fast advance towards the longer-term zone of range resistance at 1.1448-1.1500. This move is likely taking a number of trailed stops out along the way; and once prices perch above the 1.1500 psychological level, the ground may be open for sellers to return.

EURUSD Daily Price Chart

eurusd eur usd eur/usd price chart

Chart prepared by James Stanley

AUDUSD Tests Resistance, Sets Up Fade Potential

For traders that would like to fade this recent run of USD-weakness, AUDUSD may remain of interest. It’s been a topsy-turvy month for the pair as a ‘rate cut rally’ earlier this month brought a big resistance zone into play that runs from .7000-.7019. I had looked at this area a couple of weeks ago for short-side setups in the pair, and this soon came into play after that RBA rate cut. But the next week-and-a-half after that were decidedly more bearish as AUDUSD plunged down to a fresh five-month-low, testing the .6830 area before selling pressure dried up.

As USD-weakness has taken-over around the FOMC flip, prices have retraced-higher and are currently testing resistance at a prior area of key support, taken from the .6955-.6960 area looked at last week.

For traders that want to buy the US Dollar, looking to fade this recent run of weakness, even if only for a short-term retracement in a longer-term theme, and AUDUSD can remain of interest as this resistance zone helps to hold the highs.

AUDUSD Two-Hour Price Chart

audusd aud usd aud/usd two 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 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




Euro Nervously Eyes G20 Summit Outcome, Italy Budget Dispute

Political economy, economic and market themes.

Connect via:

Never miss a story from Dimitri Zabelin

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Dimitri Zabelin

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

EURUSD CHART ANALYSIS, ITALY BUDGET DISPUTE, ECONOMIC GROWTH TRAJECTORY – TALKING POINTS

  • EURUSD nervously watching Brussels’ budget dispute with Rome
  • G20 summit in Osaka Japan will likely be key event risk this week
  • EURUSD uptrend may be threatened by growing risks in Europe

See our free guide to learn how to use economic news in your trading strategy!

The economic docket in the US and Europe is broadly light, leaving the biggest event risk for the day concentrated on German IFO business data. Last week’s publication of the German ZEW survey severely underperformed and amplified the Euro’s fallwhich was initially triggered by dovish commentary from ECB President Mario Draghi.

The upcoming G20 summit in Osaka, Japan will likely be the major event risk for this week – and not just for the Euro. High-level talks between US President Donald Trump and his Chinese counterpart Xi Jinping will be a point of focus because of the implications it has on US-China trade relations. A sour outcome may push EURUSD lower and could reverse some of the pair’s recent gains if investors suddenly flock to the Dollar.

Despite showing signs of improvement, economic data out of Europe is continuing to disappoint investors. EURUSD traders may get nervous as they re-assess the fundamental outlook. A risk that continues to sap confidence in European markets is the ongoing budget dispute between Rome and Brussels.

Frustrated by the current state of negotiations and the possibility of incurring $4 billion penalty from the Excessive Deficit Procedure, Deputy Prime Minister Matteo Salvini threatened to resign and essentially collapse the current government. That is, unless he is permitted to push through a budgetary provision that allows for a 10 billion Euro tax cut.

The spread between Italian and German 10-year bond yields continues to reflect market participants’ disproportionately higher trepidation in lending to Rome over Berlin. Concerns about a Eurozone debt crisis are growing as the country comes increasingly closer to incurring a multi-billion Euro fine as a result of Italy’s budgetary ambitions that threaten the region’s financial system.

EURUSD TECHNICAL ANALYSIS

EURUSD broke through an 18-month descending resistance channel, largely as a result of US Dollar weakness caused by increasing rate cut expectations from the Fed. The pair fell just short of 1.1388 and may struggle to break past it. The path of least resistance suggests that the pair will either shy away or will briefly test the ceiling before capitulating.

Since April 2018, EURUSD remains down almost eight percent and the fundamental outlook suggests that if global economic conditions worsen, a premium will be put on liquidity and will push the US Dollar higher. At the same time, officials at the ECB are considering stimulative measures which may pressure the Euro and force it to resume its previous downtrend.

CHART OF THE DAY: EURUSD UPTREND THREATENED BY FUNDAMENTAL RISKS

Chart Showing EURUSD

FX TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter




2012-High Treasury Demand Sunk S&P 500, EURUSD Broke Resistance

Classic technical analysis, macro and economic themes.

Connect via:

Never miss a story from Daniel Dubrovsky

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Daniel Dubrovsky

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Asia Pacific Market Open Talking Points

  • S&P 500 denied confirming a record high as risk aversion nudged it lower on Friday
  • Demand for US 10-year bond soared to 2012-high, overwhelming US-China update
  • US Dollar declines persisted, EURUSD rocketed through resistance, more gains ahead?

Trade all the major global economic data live as it populates in the economic calendar and follow the live coverage for key events listed in the DailyFX Webinars. We’d love to have you along.

US 10Y Bond Auction Saw Demand Rocket to 2012-High, Risk Aversion Kicked In

Risk aversion denied the S&P 500 from extending further into record territory this past Friday. In fact, by the end of the day the index closed 0.13% to the downside, ending lower than its new high from Thursday. Initially, US Vice President Mike Pence offered equities a brief spark during the Wall Street trading session after he said that there are “positive signs” of progress with China.

However, the S&P 500 soon quickly pulled back as it declined alongside front-end government bond yields, a typical sign of risk aversion. The US Dollar also fell, ending its worst week since February 2018 amidst the market piling into Fed rate cut expectations after June’s dovish monetary policy announcement. The anti-risk Swiss Franc outperformed its major counterparts, adding to Thursday’s rally.

S&P 500 Futures 15-Minute Chart

2012-High Treasury Demand Sunk S&P 500, EURUSD Broke Resistance

At 15:00 GMT, around the time of Pence’s comment, the latest US 10-year government bond auction saw the bid/cover ratio (demand) climb to its highest since 2012 (3.43). Meanwhile, the yield tumbled to 2.06. This has been following a general trend of investors piling into Treasuries as risks of a US recession appear to be rising. In the end, a premium on liquidity may likely boost the US Dollar down the road as it did in 2008.

US 10-Year Government Bond Auction Data

2012-High Treasury Demand Sunk S&P 500, EURUSD Broke Resistance

In the meantime, the focus seems to be on a dovish Fed and lower interest rates which is hurting the Greenback. Aside from CHF, the Euro also did well on Friday. It had a slew of better-than-expected European preliminary PMI data for June. Eurozone government bond yields rallied, indicating fading ECB rate cut expectations.

EURUSD Technical Analysis

EURUSD thus found itself climbing aggressively, taking out a range of resistance between 1.1324 and 1.1348 (early June highs). This also extends the climb above a descending channel of resistance from the beginning of this year and paves the way for testing the next psychological barrier around 1.1403. Beyond that lays what could be a potential descending trend line from May 2018.

EURUSD Daily Chart

2012-High Treasury Demand Sunk S&P 500, EURUSD Broke Resistance

*Charts Created in TradingView

Monday Asia Pacific Session

The risk aversion towards the end of Friday left S&P 500 futures pointing lower as we head into the new week. If weakness permeates into Asia Pacific equities, the anti-risk Japanese Yen and Swiss Franc may rally. Meanwhile, this posses as a risk to the sentiment-linked Australian and New Zealand Dollars. The former is looking to commentary from RBA Governor Philip Lowe as the week gets underway.

It perhaps makes sense that the S&P 500 struggled extending further into record territory. This week’s G20 summit will reveal just how far US-China trade progress might go in the coming months. This has a direct impact on the Fed’s trajectory for interest rates and thus overall risk trends. Expect choppy volatility in the near-term until the outcome becomes clear.

FX Trading Resources

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter




Advertisement
Advertisement
Advertisement