US Dollar Trading Tips:
- The USD traded higher on Monday and Tuesday but set a weekly low on Wednesday following the publication of PMI Services. Although the data was published below expectations, the US dollar quickly jumped from a new low and held low at the end of the week.
- The data showed on Thursday that the increase in jobless claims is considered to be a negative USD factor given the weakness of the labor market. But the Dollar continued to show strength through Friday’s NFP report, which again saw a bullish reaction to a series of not-so-good data. Attention now shifts to next week’s CPI report.
- I will be discussing these topics in a weekly webinar on Tuesday at 1PM ET. It’s free for everyone to register: Click here to register.
The week returned with US data as Wednesday’s release of services PMI numbers followed by Friday’s NFP report. The current jobs report is different because it was released on Good Friday, when many exchanges were closed, so it is difficult to gauge the impact at this early stage for the many of the markets do not have time to buy. inside.
However, a theme that started to appear on Wednesday continued, and will continue to be of interest next week. The US dollar was sold on Monday and Tuesday, continuing its decline that began in Q4 of last year. Support began on Tuesday at around 101.53, which was held at a low on Wednesday when the Services PMI data was released. The expectation was for 54.5 but the data came in at 51.2 – so it was a disappointment but still in bullish territory.
The first result was a quick push to a new low but it didn’t last long, as the USD bulls quickly showed up and drove prices to a new high. It continued until Thursday, as jobless claims came in faster than expected. Then again on Thursday after the release of Non-farm Payrolls, it was not very strong. The headline edition missed expectations, coming in at +236k against expectations of +239k, and Average Hourly Earnings, the expansion part of the report, was also below expectations at 4.2% vs 4.3% YoY.
US Dollar – DXY Two-Hour Price Chart (indicative only, not available on Forex.com sites)
The chart is prepared by James Stanley; Data obtained from Tradingview
US dollars next week
The big question for next week is whether this trend of USD strength can continue. There are a few big factors at play there, the key of which is the CPI report set to be released on Wednesday morning, with the CPI expected to drop to 5.5% for a big increase. But – the key is also the most important of DXY in EUR / USD – it continues to hold under a large area of resistance that sits above and around the 1.1000 hand. I checked that last week and the game is still against it.
For the USD – the price of interest is 103-103.82 points played since December. This point has been supported so many times that it now enters the equation as a counter. If the bulls can hit that – there could be a greater possibility of a reversal in the currency, but it will likely continue to weaken the counterparties such as Euro or British Pound.
Price List of Each US Dollar
The chart is prepared by James Stanley; Data obtained from Tradingview
EUR/USD
EUR/USD started the week strongly, hitting a new two-month high on Tuesday and making an approach to the psychological level 1.1000. The bulls could not rise to the big picture, however, it led to a pullback to the support of 1.0883, after which the bounce developed to a low-high.
When the NFP was released on Friday, the initial impact on EUR/USD was weak, until another support response was shown at the 1.0883 area. From the daily chart, it appears that we have not yet fully met the conditions for capitulation, as this week has marked the continuation of higher highs and a firm high-low support. But the fact that it happened where it did, around the 1.1000 hold where there are some other resistances, keeping the possibility of changing the group.
For resistance next week – the main level is 1.1033 which marks the high of the current year and is at a Fibonacci high. If the bulls can rest on top of that, then the outlook for USD strength is not very good. However, if the traders can hold the line of resistance around 1.1033 or 1.1000, the door could be opened for a possible bearish swing, with supports at 1.0802 and 1.0747 to remain. measurement below the current price action.
EUR/USD Daily Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
GBP/USD
Cable traded above the 1.2500 handle for the first time since last June. But, like EUR/USD, prices started to pull back after Tuesday’s high. The pullback in the latter part of the week remained constant, with support showing at the first points of resistance around 1.2443, 1.2423 and then 1.2398. There is an area of short-term support around 1.2362 after the 1.2297 Fibonacci level returns to the picture.
That price has been seen as an important decision point in the pair in the last four months, with many cases of resistance and support. If the bulls are unable to hold prices above that level, the door is open for wider continuation patterns, with supports around 1.2182 and 1.2047 in the equation.
GBP/USD daily chart
Chart prepared by James Stanley, GBP/USD on Tradingview
USD/CAD
USD/CAD came into the week with a continuation of the strong sell-off seen in the previous week. Buyers made a quick move for the 1.3400 hand, before the last week’s USD theme revealed, helping to bring a bounce of 100 pips.
From the weekly chart, the price is working in a hammer formation. This has not been completed so it should be confirmed but, if so, a hammer or dragonfly doji after strong selling can open the door for a possible bounce, even if it is close to that. this week on hand 1.3500. This will bring the focus back to a higher Fibonacci level at 1.3652, then resistance will be seen around the 1.3700 and 1.3800 levels.
USD/CAD Weekly Price Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/JPY
I looked at USD/JPY on Wednesday as a key area of support coming into play. That area helped hold the low for the week as a bounce started to develop.
The big question here is whether the long-term downtrend will continue, as we have seen the recent holds of major resistance at 135.00 and 133.09; or the reconstruction of the higher levels may lead to another form or theme.
On the high-low side, the 127.27 Fibonacci level is key, but the last trade of March saw the 130.00 level come into play and led to a bounce of 400 pips. The area helped 133.09 to record highs on the daily chart, but last week saw another high-low in the previously seen area, from around 130.41-130.79.
For the next week – 133.09 is back in the picture and if the bulls can strengthen a daily close above that high, the target will move to 133.76 and then the psychological level 135.00. The near-term support is at 131.75, after the return of 130.41-130.79 into the picture, followed by the 130.00 level.
For the main bearish continuation patterns – this is the highest level of interest as the break opens the door for a retest of the 127.27 Fibonacci level.
USD/JPY Four Hour Price Chart
Chart prepared by James Stanley, USD/JPY on Tradingview
— written by James Stanley, Senior Strategist
Follow James on Twitter @JStanleyFX