Talking Points:
- The US Dollar continues its Q3 pullback, and a key zone of near-term support has come into play in the area that we’ve been following that runs from 94.20-94.30 on DXY[1]. There’s a deeper area of support that can keep bullish strategies in play, and this runs a bit deeper in the range that shows from 93.20-93.30. A break below that area gives us fresh seven-week lows, and this would make the prospect of bearish continuation look considerably more likely. As of now, the pullback in USD[2] is a short-term pullback in a longer-term bullish trend, but with NFP on the radar for tomorrow, that can begin to change quickly.
- Contributing to that drop in USD is continued strength in both EUR/USD[3] and GBP/USD[4]. We looked at the prospect of bullish reversals in EUR/USD in Tuesday’s webinar, drawing comparison to last year’s price action around the October ECB rate decision. This is when the bank extended stimulus into 2018, helping EUR/USD break below a key support zone (that’s currently showing as near-term resistance). But that weakness was short-lived, as a red-hot German GDP report released just a couple of weeks later brought Euro[5] bulls back to the party. With European data looking stronger, and June inflation printing at the ECB’s target of 2%, might we be looking at a redux of the same theme?
- DailyFX Forecasts on a variety of currencies such as the US Dollar[6] or the Euro[7] are available from the DailyFX Trading Guides page[8]. If you’re looking to improve your trading approach, check out Traits of Successful
