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US Dollar Price Outlook: EUR/USD, GBP/USD, AUD/USD, USD/CAD

Price action and Macro.

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US Dollar Talking Points:

  • It’s a big week for the US Dollar although the economic calendar is back-loaded. After a quiet Monday and Tuesday, the Jackson Hole Economic Symposium kicks off on Wednesday and runs into the end of the week.
  • Stocks are rallying ahead of the US open and this theme will likely remain center-stage ahead of and around Jackson Hole.
  • 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 in Focus Ahead of Jackson Hole

The early portion of this week’s economic data outlay is rather light, but it’s expected to be a big week for the US Dollar given the drivers showing up on Wednesday. The big item for this week is the Jackson Hole Economic Symposium, with a speech from FOMC Chair Jerome Powell scheduled for Thursday at 10AM ET. Given the heavy focus given to FOMC policy of late, this speech, along with accompanying speeches from various Fed members at the three-day event from Wednesday-Friday, will likely receive considerable attention as markets attempt to identify just how dovish the Fed might be.

At this point, the US Dollar has recovered a large-portion of the sell-off that showed on the back of the post-Fed tariff announcement. Resistance last week showed up around the 98.33 level that previously helped to define the yearly high in the currency in May of this year. And of this week, resistance so far has held below that level, around the 23.6% Fibonacci retracement of the June-July bullish move at 98.20.

US Dollar Four-Hour Price Chart

us dollar four hour price chart

Chart prepared by James Stanley; US Dollar on Tradingview

EUR/USD Pulls Back From Fresh Two-Week-Lows

One of the bigger surprises from last week was Olli Rehn’s comments regarding stimulus from the ECB. Rehn pointed out the continued weakening in the European economy, illustrated by the GDP contraction from Germany in Q2, as evidence that the bank needed to come to the table with something ‘significant’ at their September rate decision.

Ironically, this isn’t the first ECB denotation towards softer policy. Last month’s ECB rate decision carried the prospect for a cut. That didn’t happen, and despite a familiar dovishness from ECB President Mario Draghi, the single currency ripped-higher as the bank appeared reticent to commit to a rate cut just yet. But, just hours after the conclusion of the accompanying press conference, ECB ‘sources’ mentioned that the bank was ready to cut by 10 basis points in September. This helped to slow the up-trend but given dynamics in the US Dollar, the potential still remained for a stronger Euro, particularly if the FOMC took on an even more dovish posture.

Last week’s hat tip towards stimulus, however, came as a bit of surprise, and this helped the Euro to sell-off to fresh two week lows. If the US Dollar does remain strong, particularly around the Jackson Hole Economic Symposium, the short-side of EUR/USD can remain as attractive, with targets set towards the psychological 1.1000 level which might finally come into play after months of posturing around 1.1100.

EUR/USD Four-Hour Price Chart

eur usd eur/usd four hour price chart

Chart prepared by James Stanley; EURUSD on Tradingview

GBP/USD: Cable Collection

GBP/USD ran into a long-term trend-line a couple of weeks ago, taken from significant swing lows set in 1985 and 2016.

GBP/USD Monthly Price Chart

gbpusd gbp/usd monthly price chart

Chart prepared by James Stanley; GBPUSD on Tradingview

This didn’t stop the declines, however, as sellers made an aggressive push towards a 1.2000 level that never came into play. Since then and over the past week, price action in the pair has trended-higher, taking on the shape of a bear flag formation. This puts focus on a resistance zone that rests a bit-higher on the chart, taken from the area around 1.2191-1.2211, which currently helps to define the August highs in the pair.

GBP/USD Two-Hour Price Chart

gbpusd gbp/usd two hour price chart

Chart prepared by James Stanley; GBPUSD on Tradingview

AUD/USD: Support Build from .6750

I had looked at this one in this week’s Technical Forecast, asking the question as to whether the Aussie has finally found some element of support. It’s been a brutal year, to be sure, and this extends a bearish run that started in January of 2018 when the pair topped-out over the .8100 level on the chart.

The price of .6750 is of interest at the moment as this was the level that helped to set the low during the flash crash that showed to open the year.

AUD/USD Monthly Price Chart

audusd aud/usd monthly price chart

Chart prepared by James Stanley; AUDUSD on Tradingview

This price came back into play a couple of weeks ago and sellers even made an aggressive push below; but that was quickly offset as price action returned right back to .6750. Since then, there’s been a continued build of support here, leading to the question as to whether AUD/USD has finally found support.

AUD/USD Daily Price Chart

audusd aud/usd daily price chart

Chart prepared by James Stanley; AUDUSD on Tradingview

USD/CAD: Has the Bullish Theme Topped-Out?

It’s been a busy couple of months in USD/CAD: The pair was in an aggressive bearish trend in June and early-July, eventually finding some support just above the 1.3000 handle. As sellers postured around this price, a falling wedge formation built and this will often lead into bullish reversals. That bullish theme began to play out around the FOMC rate decision and largely continued into last week. This has led to the build of a bullish trend channel on the chart.

Of interest – last week brought a lower-high in USD/CAD as bulls were unable to test above the prior week’s swing-high. This keeps the door open for bearish strategies, particularly should the bullish channel begin to give way.

USD/CAD Eight-Hour Price Chart

usdcad usd/cad eight hour price chart

Chart prepared by James Stanley; USDCAD 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




US Dollar May Rise vs Euro if Eurozone Inflation Data Undershoots

Political economy, economic and market themes.

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US DOLLAR, ECB, EURUSD – TALKING POINTS

  • US Dollar may gain vs Euro if Eurozone inflation data misses forecasts
  • Weak price growth may push Euro lower if ECB rate cut bets increase
  • EURUSD downtrend may accelerate from the ECB and FOMC minutes

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The US Dollar may extend gains vs the Euro if Eurozone inflation data misses estimates and boosts ECB rate cut bets and the prospect of the central bank reintroducing quantitative easing. Economic data out of the Eurozone has been tending to underperform relative to economists’ expectations. Last week, preliminary German GDP data showed that Europe’s largest economy likely contracted in the second quarter.

A week before that, German ZEW Survey Expectations came in at -44.1. The last time the data hovered at those levels in the past ten years was during the 2008 financial meltdown and the Eurozone debt crisis. If the “steam engine of Europe” continues to slow down, weaker demand will begin to ripple out into other member states and undermine regional price growth.

EURUSD Technical Analysis

EURUSD is hovering around the lower lip of 16-month descending resistance with a possible floor at 1.1023. A break below this support level with follow-through could trigger a selloff until it hits 1.0950. Looking ahead, Eurozone inflation data may push the pair lower, though the real catalysts for significant price moves will likely be the publication of the ECB and FOMC meeting minutes.

CHART OF THE DAY: EURUSD Aiming at Key Support Level?

Chart Showing EURUSD

EURUSD chart created using TradingView

FX TRADING RESOURCES

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

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




Canadian Dollar Price May Reverse Versus USD, Yen at Risk Next?

Classic technical analysis, macro and economic themes.

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Asia Pacific Market Open Talking Points

  • Canadian Dollar outperformed alongside the British Pound on Friday
  • USD/CAD could be inching closer towards a reversal of its uptrend
  • Asia Pacific equities may follow Wall Street higher as Yen weakens

Find out what the #1 mistake that traders make is and how you can fix it!

The sentiment-linked Canadian Dollar outperformed against its major counterparts on Friday as risk aversion cooled into the end of the week. Canada’s benchmark TSX Composite rose about 0.9 percent as Wall Street continued trimming losses from Wednesday when the Dow Jones Industrial Average experienced its worst performance in a single day since 2018.

The rosy mood in financial markets, especially from North America, followed rising bets of quantitative easing out of Europe and fading concerns of a “no-deal” Brexit that lifted the British Pound as well. In the US, we saw fading intensity in the inversion of the 10-year and 3-month yield curve. The United States is Canada’s largest trading partner and fading concerns of a recession in the former could boost CAD.

Canadian Dollar Technical Analysis

Taking a closer look at USD/CAD reveals increasingly bearish signals that may reverse the near-term uptrend from the middle of July. A bearish Evening Star candlestick pattern formed under resistance (1.3318 – 1.3345) as negative RSI divergence emerged. The latter shows fading upside momentum that can at times precede a reversal. This places the focus on rising channel support (parallel red lines below).

USD/CAD Daily Chart

Canadian Dollar Price May Reverse Versus USD, Yen at Risk Next?

Chart Created Using TradingView

Monday’s Asia Pacific Trading Session

With that in mind, a relatively quiet economic docket to begin the new trading week during Asia Pacific hours places the focus on risk trends absent sudden updates on the trade war front. APAC equities may echo gains from Friday’s Wall Street trading session, perhaps further pressuring the anti-risk Japanese Yen. Meanwhile, the pro-risk Australian and New Zealand Dollars may aim cautiously higher

FX Trading Resources

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

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




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