U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Talking Points:

– The U.S. Dollar is moving-lower after encountering a pivotal section of resistance, and this is display strength in EUR/USD and GBP/USD. An Analyst Pick was published for a Bullish EUR/USD setup.

– Tomorrow brings a recover of FOMC mins from a Sep rate decision. The Dollar had remained comparatively clever around that assembly – Will a mins retreat that trend and pierce behind a USD-bears?

– DailyFX Q4 Forecasts have only been expelled – Click here for full access.

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In yesterday’s article, we looked during a U.S. Dollar being in a rather unsafe position after tagging a pivotal section of insurgency to finish off final week. Of course, final week finished on a rather green note as Non-Farm Payrolls printed with a initial contraction in over seven years (September, 2010). While this is being ignored to a degree, given that Hurricanes Irma and Harvey gathering vast portions of a U.S. economy into delay during September, it’s still a rather intolerable array that doesn’t utterly teach certainty as a Federal Reserve is appearing to take a stubborn proceed towards another rate travel this year.

Previously, Chair Yellen had pronounced that acceleration subsequent a Fed’s 2% idea would not indispensably obviate a bank from hiking rates. But this component of slack in a labor force is another matter entirely, as practice has been one of a few unchanging clever points for a U.S. economy while acceleration has tapered-lower after a Dec and Mar rate hikes. It was in March, when a Fed began deliberating a awaiting of change piece rebate that a pierce of USD-weakness unequivocally took on life. And around a summer, as change piece rebate perceived some-more and some-more focus, marketplace expectations for rate hikes out of a Fed whittled reduce as markets grew doubtful that a Fed would be means to travel again while a) tightening process around a change piece and b) while acceleration remained subsequent 2%.

This led to an assertive down-trend that saw as most as -12.33% of a Dollar’s value erased this year. As we changed into Q4, USD had started to uncover a bit of strength to pierce adult to a pivotal section of insurgency that runs from 94.08-94.30; and during this point, that insurgency has hold as sellers have begun to show.

U.S. Dollar around ‘DXY’ Daily: Resistance Holds for Potential Lower-High in Bearish USD Continuation

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

In yesterday’s article, we looked during 3 support areas on shorter-term USD charts in a bid of identifying when a bigger-picture down-trend competence be entrance behind into a Greenback. At this point, DXY is contrast a initial of those support levels around 93.26, and serve down-side run opens a doorway for bearish USD-continuation strategies.

U.S. Dollar around ‘DXY’ Four-Hour: Short-Term Support Tests After Response during Resistance Zone

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

As that thesis of USD-weakness has started to uncover again, EUR/USD and GBP/USD have put in bullish moves that might be opening a doorway for top-side continuation, quite for those looking to take on short-USD exposure. We’ve been following a pivotal section of support in EUR/USD that runs from 1.1685-1.1736, and after a down-side exam on NFP final week, that support has hold and prices have begun to move-higher.

EUR/USD Daily: 23.6% Retracement of 2017 Trend Runs into Confluent Support Zone

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

We had forked out dual short-term insurgency areas that could open a doorway to bullish delay in EUR/USD yesterday. The initial of those prices was a before swing-high during 1.1788, and that turn has been taken out. The subsequent stays un-encountered during 1.1833, and a break-above this levels gives us a uninformed two-week high, and an even some-more appealing awaiting of bullish delay as a bigger-picture trend returns.

EUR/USD Hourly: Higher-Highs as Short-Term Price Action Turns-Bullish

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

GBP/USD

While longer-term EUR/USD charts remained bullish for most of a Sep retracement, a British Pound is another story altogether. After a sprightly topside run in a early-portion of Sep ran into mid-month, insurgency built around 1.3600, and after about a week of struggling to take out that turn fell-flat, sellers took over to expostulate a move-lower. But that retracement was rather aggressive, with about 70% of a before bullish pierce erased over a two-week period, including a quick dump by a pivotal section of support that runs from 1.3117-1.3187.

On Friday of final week, a bit of support began to uncover only forward of a 1.3000 vast figure, and as we non-stop into this week, a array of bullish factors helped to expostulate a Pound-higher, with prices now contrast a 1.3200-handle. On longer-term charts, this can seem rather appealing for bullish continuation, given that support showed-up forward of 1.3000 and before using into a bullish trend-line. But, shorter-term cost movement is a bit some-more suspect, that we’ll demeanour during on a second draft below.

GBP/USD Daily: 1.3600 Proves Indomitable, Aggressive Retracement Follows

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

On a hourly draft below, we can see a rather well-spoken liberation that’s shown in a pair, with cost movement charity a brief hitch of insurgency during any separator of a zone, initial during 1.3117 and afterwards during 1.3187, before eventually holding over any level. And while this, in isolation, would be rather bullish, if we cruise how assertive a before retracement was, Sterling bulls would expected wish to concede for some additional acknowledgment before looking to follow a move-higher. On a draft below, we embody dual near-term insurgency levels formed on before cost movement that could support with such a signal.

Cable Hourly: Threat to Near-Term Down-Trend; Resistance Levels Applied

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

On a long-USD side of a coin, we’ve been following USD/JPY. As USD-strength showed a bit some-more prominently in a final few weeks of September, USD/JPY came to life, rising by as most 600 pips in reduction than a month. Included in this top-side run was a bullish mangle of a pivotal section of support/resistance that runs from 111.61-112.43. This section is subsequent from a array of longer-term Fibonacci levels, and while USD/JPY has put in a longer-term range-bound arrangement over a past few months, this section has offering countless inflections on both sides of cost action.

USD/JPY Daily: Key Zone Helping to Set Near-Term Support After ¥113.00 Resistance

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

Since breaking-above that longer-term section dual weeks ago, bulls have been incompetent to justify any poignant strength above a ¥113.00 psychological level. As prices have tilted-lower to exam a top-side of this zone, support has shown as buyers have shown back-up. But a longer that we exam support around 112.43, a some-more expected a deeper retracement could seem to be. Given that we have a rather vast section here, this could concede for a retracement within a section while cost movement stays bullish.

The pivotal would be for higher-low support to uncover above before swing-lows, and on a draft below, we’re looking during 3 applicable swings subsequent a longer-term zone; and if these swing-lows get taken out, a awaiting of bullish delay will demeanour extremely reduction attractive.

USD/JPY Four-Hour: Support Holding during Key Zone, Subordinated Support Applied

U.S. Dollar Drops Ahead of FOMC Minutes; EUR/USD, GBP/USD Catch Bids

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

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