- US Dollar poised to hit fresh highs against major counterparts
- Reaction of DJ FXCM Dollar Index at key resistance is important warning
- Pullback in FX volatility prices suggests price action may slow
The US Dollar looks on pace to hit fresh highs versus the Euro and British Pound. Yet we’re cautious on buying until we hit these price levels.
Traders sent the Dollar to fresh highs across the board, and the Dow Jones FXCM Dollar Index now trades at important price resistance levels. The fact that the USDOLLAR has pulled back at the confluence of its 52-week moving average and 50% retracement of its peak-to-trough decline suggests that the USD may consolidate before its next push higher. And indeed we’re cautious of buying the Greenback until we see some price consolidation.
DJ FXCM Dollar Index Rallies Sharply, Encounters Key Resistance
Source: FXCM Trading Station Desktop, Prepared by David Rodriguez.
Forex volatility remains another key factor which warns against chasing Dollar gains at these prices. We noted last week that traders had priced in an important jump in USD price moves ahead of a key week of event risk. Yet those same markets now show one-week volatility prices are once again near record-lows, and it seems traders are positioned for price consolidation before the next major Greenback moves.
Forex Volatility Prices Drop, Suggests Slower US Dollar Moves Ahead
Data source: Bloomberg, DailyFX Calculations
We are thus looking at key price support levels for the US Dollar versus the Euro and the British Pound. For the EURUSD our Strategist notes a key potential inflection level at $1.3485, and in our opinion selling remains attractive as long as the pair remains below the $1.3500 mark.
In the GBPUSD we’re keeping a close eye on how price reacts near current lows, as the $1.6820 level likewise marks the February high and key congestion. As long as price remains below potentially pivotal resistance at $1.7000, we remain in favor of GBP-short positions.
See the table below for full rundown on a per-currency pair basis and keep track of changing conditions with future e-mail updates via my distribution list.
DailyFX Individual Currency Pair Conditions and Trading Strategy Bias
Automate our SSI-based trading strategies via Mirror Trader free of charge
Forex FundamentalsAs the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
EconomicsOne particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
ForexBreaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
InvestingAccess to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
EconomicsSouth Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
Forex EducationPeer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
ForexHere is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
EntrepreneurshipA brief overview of the top apps that help forex traders with on time information, charts and more.
Investing BasicsVirtual currency is probably here to stay, but what about Bitcoin specifically? Does it have a first-to-market advantage? What are the risks involved?
Forex NewsWhen it comes to forex, some types of "fixes" are legal. But some really aren't.
- No results found.