US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

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US Dollar Talking Points:

– The US Dollar is finally catching a bounce after last week’s bullish breakout posed a brisk turn-around. I had warned of a bull trap in USD last Tuesday, and a week later sees the Dollar in a bearish short-term state as prices have broken-down to fresh lows. But – a bit of support has finally shown around a key level that had helped to mark resistance on four separate occasions in October. Can USD bulls now hold the line?

– Going along with that USD bounce is a resistance test in EUR/USD at a key zone on the chart that runs from 1.1448-1.1500. Along with that, support setups have shown in USD/CAD and NZD/USD while USD/CHF looks to be at the early stages of reversal after jumping up to fresh two-year highs just last week. These pairs were all discussed in this week’s FX Setups of the Week, and I take a closer look into each below.

– DailyFX Forecasts on a variety of currencies such as the US Dollar or the Euro 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.

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

Dow, S&P 500 Bears Not Yet Done

It’s been another brisk start to the week as stock bears continue to push in equities. Yesterday’s tech sell-off continued the seven week pattern of pain, as the Q4 open in October marked a clear change-of-pace in the equity trade. The Dow Jones Industrial Average is now trading below the psychological 25k marker, and the S&P 500 sits atop the November swing-low. A temporary respite was seen in this theme last week on the heels of some less-hawkish comments from FOMC Chair, Jerome Powell. That recovery held into the weekend, but it appears that this was long forgotten by the time we got to the Monday open, and prices have now peeled away all of those gains and then some in the S&P 500.

S&P 500 Daily Price Chart

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

US Dollar Bounces From Fibonacci Support

The pullback in the US Dollar has continued into another day, and this follows last week’s breakout to fresh one-year-highs. Yesterday saw prices in the US Dollar drop towards a key trend-line that’s been in play since the September FOMC rate decision. Buyers were unable to hold the line at that level, and a quick drop developed that saw DXY move down towards a test at 96.04, which is the 50% marker of the 2017-2018 bearish move in the currency. Perhaps more importantly, this is the same level that helped to set resistance on four separate occasions in October before buyers were finally able to push a breakout.

US Dollar Four-Hour Price Chart: Bounce From Early-October Resistance

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

From short-term charts, we can see where USD bulls aren’t yet out of the woods as there is a continued sequence of lower-lows and lower-highs. But – there is an encouraging first step where the drop down to support has been coupled with a bump-higher and an attempt to re-claim higher-low support on that trend-line projection.

US Dollar Hourly Price Chart: USD Bulls Attempt to Re-Claim Trend-Line Support

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

EUR/USD Holds at Key Resistance

For USD-strength strategies, EUR/USD remains as one of the more attractive candidates, and this is a theme that’s been present through this month’s FX Setups of the Week articles. As part of that backdrop around EUR/USD is a key zone of prior support that runs from 1.1448-1.1500. This zone helped to hold support in the first half of October over multiple occasions; and when prices broke down, this area helped to mark resistance for November. The early-part of the month saw a resistance test at the bottom portion of the zone and a week later, the 1.1500 level came into play to help mark the monthly top on the pair.

After the 1.1500 resistance test, EUR/USD was finally able to break-down to a fresh yearly low. But, sellers shied away from the 1.1212 Fibonacci level, and a 200+ pip retracement developed as prices flung back into this resistance zone yesterday.

EUR/USD Eight-Hour Price Chart

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

GBP/USD: Caution as Brexit Dynamics Remain in Headlines

GBP/USD has finally calmed a bit after the jaw-dropping short-term price action of last week. On a longer-term basis, the pair has remained within the range of the past three months; but picking a direction on shorter-term charts was of difficulty as a number of headlines pushed the pair in either trajectory.

Last Thursday the pair put in a steep drop on news that Brexit Minister Dominic Raab was resigning. This flung the pair down towards 1.2700, at which point a bit of support began to show. That held into Friday, and buyers were able to push up towards the 1.2875 level; but that appears to now be a line-in-the-sand as there are now three days of resistance showing at this level.

GBP/USD Hourly Price Chart: Hold at Short-Term Resistance from Prior Support

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

NZD/USD Support Check After Fresh Four-Month Highs

USD-weakness has been a primary theme in FX Setups of the Week for this month, and this comes despite the US Dollar’s continued topside run. The primary reason is one of placement, as the bulk of that USD strength has appeared to come from EUR/USD and, at times, GBP/USD.

Meanwhile, both AUD/USD and NZD/USD have been putting in bullish cues for over a month now. As USD-strength ran pretty clearly in October, both Aussie and Kiwi held support relatively well; putting each pair in a position so that once USD-strength calmed, AUD/USD and NZD/USD would be set up attractively for bullish strategies. That’s played out so far in November, and for this week I looked at another setup in NZD/USD, looking for a pullback to support at prior resistance after last week’s fresh four-month highs. That support filled-in yesterday and prices are now testing a key area of resistance on the chart around .6875.

NZD/USD Two-Hour Price Chart

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

USD/CHF Breaks Down to Fresh Monthly Lows

Going along with those USD-weakness setups has been USD/CHF, as I started looking at this two weeks ago in the effort of catching a top in the pair. USD/CHF encountered a number of resistance levels while moving up to two-year highs, and a bit of turbulence started to show with the pair trading above the parity level. It took a little while for bears to start to gain control, but that appears to have happened over the past week, and this can keep the door open for USD-weakness scenarios as the pair comes off of fresh two-year highs that were set just a week ago.

USD/CHF Four-Hour Price Chart

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

USD/CAD Bounce From Confluent Support

In this week’s FX Setups, I talked about the difficulty in finding attractive setups for long-USD scenarios. One had showed up in USD/CAD as prices pulled back to a confluent level of support around 1.3132, which offers all of a trend-line projection, a Fibonacci level and a batch of prior resistance turned fresh support. That confluent zone has held thus far on the fresh week, and this keeps the door open for bullish USD strategies in the pair.

USD/CAD Four-Hour Price Chart

US Dollar Bounce From Fibonacci Support; EUR/USD Holds Key Resistance

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on 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 a plethora 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.

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