US Dollar Prints Bull Pennant Ahead of Powell, US Data

Talking Points:

– The US Dollar is impending a finish of what’s been a unequivocally clever week, entrance on a heels of final week’s sell-off that constructed a uninformed three-year low on Thursday night. But after that low, a bullish engulfing candlestick showed-up on Friday’s cost action, and that strength has continued around this week. After yesterday’s pullback in USD, a longhorn streamer arrangement has started to form nearby a insurgency turn of 90.00 on DXY.

– Next week’s economic calendar brings a complicated US concentration with Mr. Jerome Powell’s initial coming of note on Wednesday and Thursday as he delivers his initial semiannual financial process news to Congress (dubbed ‘Humphrey Hawkins testimony’).

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Next Week’s Economic Calendar with Heavy US Focus

Next week brings a series of US drivers to a table, with a approaching prominence being a initial coming of note for incoming Fed President, Jerome Powell. On Wednesday, Mr. Powell walks adult Capitol Hill to start his initial semiannual financial process news to Congress, dubbed ‘Humphrey Hawkins testimony.’ On Wednesday, Mr. Powell speaks with a House Financial Services Committee, and on Thursday he testifies in front of a Senate Banking Committee. Each of these will start with prepared remarks, after that a building is non-stop for questions and these can operation from income inequality to Fed process to tellurian warming.

DailyFX Economic Calendar: High-Impact Events for Week of Feb 26, 2018

DailyFX Economic Calendar

Chart prepared by James Stanley

In new years past, this Humphrey Hawkins testimony has had a bent to be down-played, as a Fed has mostly executed their strategies around rate decisions and concomitant press conferences. The important difference being Feb of 2016, when Fed Chair Janet Yellen spoke in-front of Congress as tellurian markets were in a state of disarray. On a initial day of her testimony, she was directly asked what a Fed competence do with disastrous rates if a sell-offs during a time worsened: Chair Yellen responded that a Fed wasn’t even certain if disastrous rates were ‘legal’ for a bank. This did small to soften markets, and a sell-off continued around a day. But – on day 2 of that testimony, Chair Yellen gave a distant opposite answer to that really same question, responding that a Fed ‘wasn’t going to take any process options off of a table.’ This, markets liked, and in short-order, a bullish sight in US bonds had picked right behind adult where it had left off.

Given that this is Mr. Powell’s initial open coming of note given holding a reins of a Fed during a commencement of this month, this debate will expected be watched for clues or hints towards how a Fed competence demeanour to exercise process moving-forward.

US Dollar Gearing Up

Ahead of subsequent week’s US information outlay, a Greenback has exhibited a bit of overload around a pivotal turn of resistance. The cost of 90.00 on DXY helped to retreat a bullish allege final week around a US acceleration print; and buyers pushed a Greenback above this level progressing this week after a recover of FOMC mins from a bank’s Jan meeting. And while there was a brief volume of support in a overnight event brazen of yesterday’s open, buyers were incompetent to reason a line and prices pulled behind to a support area we were looking during around 89.60, and so distant this turn has held. A higher-low copy thereafter, joined with a set of lower-highs that’s started to uncover on a hourly furnish a net of a short-term exquisite crowd pattern.

US Dollar Hourly: Wedge Forms Near Resistance

us dollar hourly chart

Chart prepared by James Stanley

The crowd mixing nearby insurgency after a clever week in a Greenback comes after final Friday printed a bullish engulfing candlestick on a daily draft of DXY. Engulfing setups are illusory for continuation, and that’s mostly what we’ve seen play out this week. But – this leads into another setup of interest, mixing that before bullish trend with a short-term crowd display nearby a tip of a move, and that’s a longhorn streamer formation. A longhorn streamer formation, like a longhorn flag, is mostly traded as a delay pattern, and this would indicate to a probability of continued USD-gains as we pierce towards subsequent week.

For traders looking to take a bullish stance, a mangle above a swing-high during 90.06 would offer a bullish pierce above a shorter-term wedge, opening a doorway for topside bearing in a Greenback.

US Dollar Hourly Chart: Bull Pennant Formation

us dollar hourly chart

Chart prepared by James Stanley

US Dollar Balance

Despite a bullish indications that competence be display in a Greenback as we pierce into a week that’s complicated with US data, traders will expected wish to pierce brazen with some component of a offset approach, as a longer-term trend still stays bearish in nature. As we discussed yesterday, topside breaks in DXY above 90.50 and 91.00 could make a awaiting of a bigger pierce in a Dollar seem some-more probabilistic; though until that happens, some component of change will expected be warranted.

For short-side USD strategies, there have been a few pairs of note that could sojourn engaging as we pierce into subsequent week. The span that we’ve been following for such has been USD/CHF, and this week’s slice in a Dollar helped to replacement a bearish setup in a pair. An analyst collect was set on USD/CHF on Wednesday shortly after a recover of FOMC minutes, and by a subsequent morning prices in a span had already moved-down to set a uninformed lower-low. At this point, price action in USD/CHF is retracing a apportionment of those losses, and this opens a doorway to another iteration of lower-high insurgency should some sellers show-up brazen of a before swing-high during .9409.

USD/CHF Hourly: Thwarted during Resistance

usdchf hourly chart

Chart prepared by James Stanley

AUD/USD Remains Attractive for Long-USD Scenarios

On a other side of a Dollar, we’ve been examination AUD/USD for long-USD exposure. The span started to reverse in later-January, before a Dollar started to uncover many pointer of life. But, as a Dollar woke adult in early February, sellers had their approach with AUD/USD and this combined a sincerely unchanging bearish pierce in a pair. Yesterday’s pullback in USD helped AUD/USD firm-up to an area of insurgency around .7850, and given afterwards we’ve seen bears pull prices lower. If we do see that longhorn streamer in USD fill-in, heading to breaks in DXY of a 90.50 and 91.00 levels, this could pierce a deeper bearish pierce to Aussie that competence pierce behind into play a before area of support around .7500.

AUD/USD Hourly Chart: Lower-Lows, Highs

audusd hourly chart

Chart prepared by James Stanley

EUR/USD Continues to Test Support

The bullish allege in EUR/USD does not demeanour appealing for topside setups notwithstanding a fact that support continues to reason around a ‘s2’ territory that we’ve been following. The emanate would rest with a fact that bulls have been incompetent to pattern many fad on tests of before highs, and bears have been putting in a method of lower-lows that indicates a deeper retracement competence be on a setting before a longer-term bullish trend competence be prepared for continuation. At this stage, it would seem that a re-test of a 1.2213 area of support competence be in a cards; and if that support can't hold, demeanour for a deeper pierce towards a Fibonacci level during 1.2167.

EUR/USD Hourly Chart: Despite Support, Bulls Unable to Muster Much of an Advance

eurusd hourly draft

Chart prepared by James Stanley

US Stocks in a Spotlight

Given that we’re going to be saying a Fed Chair attest in-front of Congress shortly after a pickup in sensitivity lifted some red flags opposite markets, and logically we will see a subject of equity opening come-up. Many have already referred to a ‘Powell Put,’ that refers to all of a ‘Greenspan Put,’ a ‘Bernanke Put’ and a ‘Yellen Put.’ This is a import that Fed Chairs are supportive to marketplace sell-offs, mostly altering stances of opinions on long-term matters formed on short-term volatility.

Well, progressing in a month we saw a pickup in short-term volatility, so this is expected something Mr. Powell will be questioned about. The matter in that he responds, only as we saw from Janet Yellen in Feb of 2016, will expected have a large impact on near-term marketplace dynamics, and a SP 500 has spent many of this week range-bound after final week’s liberation from a early-month sell-off. One approach or a other, this operation will expected give approach subsequent week.

SP 500 Hourly: Range-Bound This Week

SP 500 hourly chart

Chart prepared by James Stanley

To review more:

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— Written by James Stanley, Strategist for DailyFX.com

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