EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Talking Points:

– The U.S. Dollar gained in a Euro and Asian sessions after Fed Chair Janet Yellen’s debate yesterday.

– This deepened retracements in EUR/USD and GBP/USD; and a topside pierce in USD/JPY continued to rise as a span broke-above a pivotal section of resistance. We demeanour during any below, along with an engaging setup in EUR/JPY.

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In yesterday’s article, we looked during a U.S. Dollar as a banking traded adult to a uninformed Sep high forward of a complicated cost of information and Central Banker speeches. And during yesterday’s debate from Fed Chair Janet Yellen, there were utterly a few comments that seemed to locate a courtesy of marketplace participants. Key of that was a matter that indicates that a Fed might not let determined sub-target acceleration keep them from additional rate hikes and process normalization.

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

From @DailyFXTeam Twitter Account, originally posted on Sep 26, 2017

Given that the many new CPI imitation out of a U.S. came-in during 1.9% and a Fed’s aim is 2%, this would prove that a Fed is prepared to travel in December; and even if acceleration stays sub-2%, that travel might still take place.

These set of comments gave a discerning cocktail of strength to a Dollar after ‘DXY’ had faced insurgency around a 93.00-handle for most of a day; though during a Asian and afterwards a Euro session, USD-strength continued and prices ran adult to set a uninformed monthly high.

U.S. Dollar around ‘DXY’ Four-Hour: Fresh Monthly Highs Push Towards Resistance Zone 94.08-94.30

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Chart prepared by James Stanley

This deeper bullish pierce puts importance on that before section of insurgency around 94.08 on a Greenback. If DXY is means to pull above this resistance, we’ll be looking during uninformed dual month highs; and during that point, a delay pierce of strength might be in sequence for re-tests of 95.00 and afterwards 95.86. But until then, a longer-term bearish trend continues to show.

U.S. Dollar around ‘DXY’ Daily: Bounce Fast Approaching Resistance Zone 94.08-94.30

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Chart prepared by James Stanley

This delay of U.S. Dollar strength has deepened a retracements we were looking during yesterday in EUR/USD and GBP/USD. And while Cable still stays a bit divided from those deeper support points we were looking for, EUR/USD is now contrast a commencement of that ‘big picture’ support section that runs from 1.1685-1.1736. The cost of 1.1736 is a 38.2% Fibonacci retracement of a ECB QE pierce in a pair, and 1.1685 is a 23.6% retracement of a lifetime pierce in a pair, holding a low from a year 2000 adult to a high in 2008. Perhaps some-more critical than anything fanciful is a practical: This area helped to set support during a Aug retracement, usually forward of a Mario Draghi Jackson Hole Speech.

EUR/USD Daily: Price Action Begins Test of Key Support Zone

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Chart prepared by James Stanley

Meanwhile, if we pierce over to GBP/USD we’ll see that USD-strength stability to cost through, despite a bit some-more tenuously. We looked during a longhorn dwindle arrangement in a span in yesterday’s technical essay on GBP/USD, and prices have usually gotten some-more bearish since. We’ve seen a down-side mangle of channel support with insurgency afterwards display adult on a under-side of a longhorn flag, and this gives a coming that a deeper retracement might be on a way.

GBP/USD Daily: Price Action Slides Below Bull Flag, Deeper Retracement Potential

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Chart prepared by James Stanley

USD/JPY

While USD-strength has continued, JPY has taken over as one of a weaker currencies accessible to FX traders. On Monday, we looked during a outrageous section of insurgency in USD/JPY that runs from 111.61-112.43. Within this section are a series of Fibonacci levels, and around 2017, this area has been a pivotal various for support and insurgency during USD/JPY’s range.

The open of this week saw prices primarily pierce into that zone, and yesterday saw insurgency show-up during a top-end of 112.43. With prolongation in a overnight session, we now have uninformed two-month highs as a span is trade above a 113.00 level, and this opens a doorway for bullish delay after a before longhorn dwindle arrangement gave way.

USD/JPY Hourly: Bullish Break of Bull Flag, Surge Beyond Resistance Zone

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Chart prepared by James Stanley

For traders looking to mix a above themes, a cross-pair of EUR/JPY could be interesting. This before high-flying trend has seen a rather firm pullback over a past week; though yesterday’s cost movement saw a Doji imitation with support during a before indicate of resistance, giving a coming of support after a ~270 trill pullback. We had created about EUR/JPY progressing on a morning, and that essay is accessible for anyone looking for a bit some-more information about a setup.

For those looking for a bit of additional acknowledgment of delay in a pair, a daily tighten of today’s candle above 133.07 would give us a morning star formation, that can be a sincerely engaging bullish annulment setup, generally when we have what’s been a rather assertive bullish trend of recent.

EUR/JPY Daily: Support during Prior Resistance

EUR/USD Begins Test of Key Support as U.S. Dollar Strength Continues

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

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