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Talking Points:

- The U.S. Dollar is continuing-higher after last Friday’s check of longer-term support around Non-Farm Payrolls.

- IG Client Sentiment on EUR/USD is currently -2.11, and GBP/USD is -1.66[1]. Given retail traders’ traditional contrarian nature, this would be bullish indications for both pairs.

- DailyFX Q1 Forecasts have recently been released: Click here for full access[2].

To receive James Stanley’s Analysis directly via email, please sign up here[3]

In yesterday’s article[4], we looked at the U.S. Dollar extending gains after another check of support around last Friday’s Non-Farm Payrolls report[5]. While prices closed below resistance last week, Dollar strength has continued into this week; and at this point, the Greenback is carving out fresh 2018 highs as buyers push prices higher. This opens up a host of interesting possibilities, as a couple of key U.S. data points loom on the calendar for Friday of this week. This is when we’ll get U.S. CPI and Retail Sales data, and this can be an opportune time for the U.S. Dollar to ‘put up or shut up’ regarding bullish potential for the remainder of the month.

On the hourly chart below, we’re focusing-in on this near-term trend and we’ve added a couple of potential support levels based on recent price action. Prior swing-high resistance from 92.35-92.40 could be an aggressive area to look for higher-low support, and a bit deeper, we have an area of prior resistance that syncs up with recent swing-low support, running from 91.21-91.26, and this could be interesting for bullish continuation on shorter-term charts:

U.S. Dollar via ‘DXY’ Hourly: Potential Support Zones Applied

U.S. Dollar Rally Drives Forward as Euro Correction Continues

Chart prepared by James Stanley[6]

Longer-Term U.S. Dollar

On a longer-term basis, traders would likely want a bit more confirmation before assigning bullish biases to the Greenback. Current resistance is showing around the December swing-low that had printed on the first day of last month, so from the four-hour chart we still have a case of old support showing as current resistance.

U.S. Dollar via ‘DXY’ Four-Hour: December Swing-Low Helping to Set Current Resistance

U.S. Dollar Rally Drives Forward as Euro Correction Continues

Chart prepared by James Stanley[7]

A sustained break above the 92.60 level in DXY[8] would make the prospect of bullish continuation on a longer-term basis could look a bit more attractive, and this would be driven by the assumption that the range that’s shown in the Dollar since August of last year would be set to continue. This is what we were looking at in the Q1 Technical Forecast on the U.S. Dollar, and this is available from the following link: DailyFX Q1, 2018 Forecasts[9].

U.S. Dollar via ‘DXY’ Daily: Sideways Since August, 2017

U.S. Dollar Rally Drives Forward as Euro Correction Continues

Chart prepared

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