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US Dollar Clings onto Key Support Levels

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– US Dollar testing critical support versus the Euro, Yen, British Pound

– A larger breakdown seems less likely given low FX volatility prices, suggests USD is a buy

– See more information on DailyFX on the Real Volume and Transactions indicators

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The US Dollar trades at critical support versus the Euro, Sterling, and Japanese Yen. Low forex volatility prices suggest that a larger breakdown remains unlikely.

EURUSD

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The Euro has surged above major congestion at the $1.10 mark, but similarly substantial resistance starting at $1.12 marks another important test. Failure here would make $1.10 the next near-term target, while a break above $1.12 targets a move towards $1.14.

GBPUSD

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The British Pound once again trades at substantial volume-based resistance at the $1.5650, and another failure would keep short-term focus on congestion support in the $1.54-1.55 range. Of course resistance can only hold so many times when consistently tested. A break above $1.5650 would likely lead the pair towards the June highs near $1.5800.

USDJPY

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The Japanese Yen has rallied sharply against the US Dollar, and the USD/JPY now trades almost squarely at the top of a key volume-based congestion range near ¥123.50. Failure to hold above would leave near-term targets closer to major lows at ¥120.50. A hold above ¥123.50 would instead make continued gains towards ¥126.00 more likely.

AUDUSD

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The Australian Dollar briefly broke to fresh lows versus the US Dollar before bouncing sharply, and the AUD/USD now trades at major volume-based resistance levels near $0.7400. Failure to close above would nonetheless leave focus on recent lows near $0.7250. A break above $0.7400 would instead target the bottom of a major volume-based congestion range near $0.7600.

GBPJPY

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

A sharp British Pound rally versus the Japanese Yen leaves it just short of key volume-based congestion levels near ¥195, and trading above said level makes major highs at ¥196 the next logical target. A failure to finish above volume-based resistance would shift our attention towards similar support at the top of a congestion range near ¥193.

EURJPY

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The Euro broken sharply above major volume-based resistance versus the Yen at ¥137, and the move opens up a larger rally towards modest volume-based resistance at ¥140. Support is now former resistance at ¥137.

USDCHF

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The US Dollar has pulled back sharply versus the Swiss Franc, and the sudden downturn leaves it almost squarely at major volume-based support near SFr0.9650. Failure to hold above here offers little in the way of comparable volume-based support until SFr0.9300. A successful hold above turns attention towards recent highs near SFr0.9900.

USDCAD

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

A notable pullback in the US Dollar leaves it at significant volume-based support versus the Canadian Dollar near the C$1.2900-1.2950 zone, and a failure to hold above would shift focus towards major congestion starting near C$1.2700. A successful rebound here would leave recent spike-highs near C$1.3200 as the logical short-term target.

NZDUSD

Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)

Length of bar indicates the sum of Buy and Sell volume.

US Dollar Clings onto Key Support Levels - Bounce Seems Likely

Data source: FXCM Real Directional Volume Indicator, Chart source: R. Prepared by David Rodriguez

The New Zealand Dollar trades almost squarely at major volume-based congestion in the $0.6600-$0.6700 zone, and failure here keeps our focus on major lows closer to $0.6500.

Written by David Rodriguez, Quantitative Strategist for DailyFX.com

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Twitter at http://www.twitter.com/DRodriguezFX

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

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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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—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.

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Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

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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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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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

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