Analys från DailyFX

Dollar Technical Analysis: DXY Building Momentum Ahead of NFP

Published

8 år ago

9 mars, 2017

DailyFX

Talking Points:

-Dollar Technical Strategy: favoring strength, better played against weak FX ahead of NFP

-Previous Post: Dollar Technical Analysis: DXY Rides Into March On A High Horse

–Supporting markets like Treasury Yields Helping Support Higher USD

-If you’re looking for trading ideas, check out our Trading Guides

The Dollar Index is the simplified approach to judging the strength of the world’s reserve currency. However, looking simply at the DXY to analyze USD strength would be a short-sighted given the recent dynamics in the market. Over the last week we’ve seen the USD swing into strength most notably against currency pairs that do not make up large weights in the DXY.

The DXY is weighted heavily in favor of Euro (57.6%), followed by Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%). The most dominant strength in March has been seen in a handful of these components of DXY, such as the Canadian Dollar. The real strength can be seen in other commodity currencies, hence the drop in Oil like the Australian and New Zealand Dollar, Norwegian Krone, and a handful of Emerging Market Currencies.

This week, a strong bump at the front-end of the UST yield curve, notably 2’s has aligned with the view that the Fed has the engine started and the gas tank filled in anticipation of a long cycle of hiking rates toward normalization. Friday’s Non-Farm Payroll is only expected to add to the conviction of multiple rate hikes to come starting with one at the March 15 FOMC. The stronger USD may continue to build pressure against commodities linked to the price of Oil, which recently settled below $50/bbl for the first time in 2017.

Technical View:

Doubts to the Bullish Picture crepped into view over the prior month, but we gave preference to the uptrend continuing over a strong reversal. Now, add this instance to another in the pile of trends that continue instead of reverse despite fundamental signs of a reversal waning.

The uptrend has been solidified when looking at intermarket signals such as treasury yields pushing higher or the breakdown in the commodity sector. Price action still seems to be struggling near the 61.8% (102.07) retracement of the 2017 range, but a the background seems to favor an eventual push higher toward the 78.6% retracement at 102.84.

Most strategists are favoring an eventual push through the January high of 103.82, but as noted earlier, the extreme weighting of the EUR means that we likely need to see a breakdown in the EUR for this to take shape. Given the French election in a few months, we could see such an environment develop. The 1M 25-delta risk reversal for EURUSD shows a premium being paid for out of the money puts relative to calls, which means they’re paying to protect downside risk. This does not make the downside a foregone conclusion, but rather a possibility that some see likely enough to pay to protect themselves against the event risk.

Interested in Joining Our Analysts, Instructors, or Strategists For a Free Webinar? Register Here

Chart created by Tyler Yell, CMT

—

Shorter-Term DXY Technical Levels for Thursday, March 9, 2017

Dollar Technical Analysis: DXY Building Momentum Ahead of NFP

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours of trading.

T.Y.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

7 år ago

30 september, 2017

DailyFX

What’s inside:

EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
Resistance in vicinity of 11825/80 likely to keep a lid on further strength
Targeting the low to mid-11600s with more selling

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.

Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.

Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).

Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.

For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.

EURUSD: Daily

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

7 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

7 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form