EUR/USD Maintains Above 1.2000 as USD Weakness Continues into 2018

Talking Points:

– The U.S. Dollar set a 14-year high on Jan 3rd of final year. Since then, we’ve seen a heartless annulment in a Greenback that’s wiped divided as most as -12.3% of a currency’s value.

– This delay of USD-weakness has helped to propel EUR/USD above a pivotal psychological turn during 1.2000. This was a large area of insurgency in a span final year, though after a support check there yesterday, a available of bullish delay remains.

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The U.S. Dollar’s down-trend only distinguished a birthday. It was only a year and a day ago that DXY set a uninformed 14-year high during 103.82. As we came into final year, small looked to mount in a approach of a Greenback’s bullish ascent, as a ‘Trump Trade’ aka a ‘reflation trade’ continued to expostulate investors into U.S. resources of both an equity and banking variety. But, that high that was set on Jan 3rd was not to be tested again, as sellers began to uncover in January, and remained in-control of USD cost movement for flattering most all of 2017. This bearish expostulate saw as most as -12.3% of a Greenback’s value erased when a low was set in September; and given that this is a pierce in a non-levered currency, that’s utterly a change-of-pace.

But, after that low was set in September, a bit of wish began to build around Dollar bulls as USD spent a subsequent dual months trade higher: But after unsatisfactory during a 95.00 level, bears came behind and have remained in-force ever since. This week saw DXY gap-lower, and that debility has continued to uncover as cost movement is bark towards a 2017 low that is also a 3 year low in DXY.

U.S. Dollar around ‘DXY’ Daily: Bearish Trend Turns One Year Old, Continues into 2018

USD 2017 Down-Trend

Chart prepared by James Stanley

The large doubt during this indicate is either we see some component of response during these three-year-lows. The rebound that showed adult in Sep took place around a pivotal level. The cost of 91.36 is a 50% Fibonacci retracement of a 2014-2017 bullish move. This gave arise to a intensity for 2017 being some component of digestion in a longer-term thesis of USD-strength; though if we take that turn out, there is small station in a approach of a run towards a psychological turn of 90.00.

U.S. Dollar around ‘DXY’ Weekly: Fast Approaching Three-Year Low, 50% Retracement of 2014-2017 Move

DXY Weekly

Chart prepared by James Stanley

Complicating a available of holding on bearish bearing in a Greenback during a impulse is a fact that we’re sitting during short-term support, around a turn that had hold a lows on Tuesday and Wednesday. For traders looking to take on short-side positions in a U.S. Dollar, available a exam of insurgency could be a most some-more savoury approach of coming matters, and on a subsequent two-hour chart, we’ve combined 3 intensity levels of seductiveness adult to 92.50, that was a Nov swing-low.

U.S. Dollar around ‘DXY’ Two-Hour: Sitting Near Short-Term Support, Resistance Levels Applied

DXY Two-Hour

Chart prepared by James Stanley

EUR/USD Maintains Above 1.2000 After Support Check

With a U.S. Dollar pushing towards 3 year lows, we also have EUR/USD ripping towards three-year-highs. This was substantially one of a some-more startling takeaways from final year, as many forecasts were looking for a exam of relation in a span as we came into a year with U.S. Dollar strength display rather prominently. But – as that annulment started in Jan and continued by Q1, a legitimate thesis of Euro-strength began to uncover as investors attempted to get in front of any intensity impulse exit that competence be seen out of a Euro-zone.

That impulse exit did not uncover adult in 2017; as a ECB merely extended their bond shopping module into subsequent year. This dented that bullish trend for all of about dual weeks; though as European information continued to uncover with promise, bulls came right behind to pull prices towards 3 year highs.

The cost of 1.2000 seemed to be a stumbling retard to that bullish expostulate in 2017: We saw 3 opposite tests of that turn in late-August into September, any of that faltered.

EUR/USD Daily: Price Action Re-Engages 1.2000 After Failing in August/September, 2017


Chart prepared by James Stanley

This area of before insurgency has already showed-up as near-term support. After opening a year right around that 1.2000 level, bulls took over to set a uninformed swing-high during 1.2081. After pulling back, buyers came-in during that before turn of insurgency to pull prices fill-in towards that short-term high.

EUR/USD Hourly: Support during Prior Resistance as Bulls Continue to Drive-Higher


Chart prepared by James Stanley

Just as we looked during above with a U.S. Dollar – a trend is sincerely attractive, though entrance is difficult by a fact that any of those moves demeanour a bit stretched during a moment. So, traders have one of dual options to try to burst on a side of that trending bias: Either follow a move, or be studious and wait for a cleaner entrance to show.

The track of calm in a EUR/USD setup now would be looking for a higher-low above that before pitch during 1.2000. This would concede a merchant to board stops subsequent a before pitch low of 1.2000 that also happens to be a vital psychological level. On a hourly draft below, we demeanour during dual shorter-term levels that can be employed for such a purpose.

EUR/USD Hourly: Potential Short-Term Pullback Areas Above 1.2000 Psychological Level

EUR/USD Hourly

Chart prepared by James Stanley

— Written by James Stanley, Strategist for

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