USD Technical Forex Analysis for Forex Traders
The USD ends the first day of the week on a high note making gains against the majors with the exception of the Yen; analysts note that the USD/JPY is holding below the monthly opening range suggesting a technical correction is finally in play. USD/JPY high prints overnight at 99.42 failed to find stops said to be resting above the 99.50 area and weakness in Yen cross-spreads pressured the rate all day. Low prints in late New York at 97.64 cleared stops resting under the 98.00/10 area taking the CTA’s and black-box traders to the cleaners; the rate never managed a bounce of any significance suggesting that a test of the 50 day MA is now in play around the 97.20 area.
Traders note that the 270 point sell-off by the DJIA added a bit of pressure to the rate as well with more losses expected overnight arguing for a further USD/JPY decline to start Asia Tuesday. GBP dropped to the 100 day MA for a low print at 1.4499 but quality bids showed up to lift the rate back to the 1.4950 area into the end of the day; traders note that volumes were lighter on the move and stops under the 1.4550 area failed to encourage active selling. EURO remained under pressure dropping to a low print at 1.2888 before regaining the 1.2900 handle and holding 1.2920/30 area most of the day. Traders note that a test of the 1.2880 area likely will encourage another round of bids suggesting that a bounce from support might be in the works overnight. USD/CHF rallied to a high print at 1.1744 before falling back under the 1.1700 handle possibly putting in a high for the week; the rate is holding around 1.1670 area in thin trade leaving a solid sell wick on the day.
Traders note buyers were more on the side of technical breakout buying rather than established longs suggesting the rate over-extended to the upside on momentum. USD/CAD rallied to the 1.2380 area for a high print at 1.2385 before dropping back but late bids kept the rate firm on anticipation of a BOC rate cut this week at the next meeting; traders note that longs were large names suggesting that follow-on buying may lift the rate to test the 1.2400 handle but offers are likely waiting in the 1.2420 area overnight. In my view, the USD rally today was largely technical in nature and stops helped drive trade to the highs but the move was mostly corrective in nature. With a large drop in equities today along with potential follow-on selling likely overnight the move in the Greenback has momentum for possibly a new high print for the week but with the technical nature of the action seen it looks to me that the buyers are short-term traders who will book fast gains on further strength. Should that be the case a fall-back in the USD would be due by mid-week setting the stage for declines to end the week. Look for the USD to follow-on higher in Asia to start with sellers likely at the next level of resistance.
Today’s US Dollar Trading
- USD holds gains in New York after running stops
- Most pairs respect S/R but volumes light
- Traders note cross-spreaders for Yen active in all pairs
- Look for the USD to follow-on higher overnight
- Short-term traders likely to liquidate longs into resistance
Looking Ahead to Tuesday
All times Eastern (-5 GMT)