US Dollar Price Action Setups Ahead of FOMC, NFP

US Dollar Price Action Setups Ahead of FOMC, NFP


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US Dollar: Stage Set for FOMC, NFP

This is one of the more exciting backdrops that we’ve had around the US Dollar in some time. The currency put in a bullish breakout last week to set a fresh 22-month high. And potential for bullish continuation even looked attractive coming into this morning, but bears have continued to push and prices have put in the makings of a reversal from a false breakout, setting the stage for a fairly exciting three-day-span on the economic calendar.

Tomorrow brings the FOMC, Thursday brings the Bank of England’s Super Thursday rate decision, and Friday brings the big one with Non-Farm Payrolls. The big question is whether USD-bulls can get back in the driver’s seat after this week’s pullback, and I looked into that along with quite a bit more in this price action webinar.

US Dollar Pulls Back to S2 Zone as Bulls Pull Back from the Bid

Perhaps its just some position squaring after last week’s breakout, but bulls have continued to step back from the bid so far in this week’s trade. The first support zone followed in DXY helped to hold yesterday’s low, and the ‘s2’ zone has come into play to help mark today’s low. But, as looked at on shorter-term charts, sellers have continued to push and it looks as though there may be a continued pullback ahead of tomorrow’s FOMC rate decision.

This highlights support potential around the 97.20-97.30 area on the charts. A bit deeper offers another zone of potential around 96.75-97.90.

US Dollar Four-Hour Price Chart

us dollar usd four hour price chart

Chart prepared by James Stanley

EUR/USD Tests Key 1.1212 Level

This is a big item of interest across FX markets at the moment, as EUR/USD has also pulled back from last week’s breakout. The primary difference is one of context, as EUR/USD is testing resistance around the prior area of support. A hold of resistance here, with a daily close inside of the Fibonacci level at 1.1212 can keep the door open for short-side continuation strategies. There are another two areas of resistance potential above, although the bearish trend theme wouldn’t be as attractive; but those exist around 1.1250-1.1262 and the area around 1.1325.

EUR/USD Four-Hour Price Chart

eur/usd eurusd four hour price chart

Chart prepared by James Stanley

GBP/USD Bulls Make Their Mark

Similarly, last week’s bearish breakout in GBP/USD has come into question, and the big difference from EUR/USD above is the fact that buyers have continued to push beyond resistance potential at that prior area of support. This can make the pair a bit more attractive for short-USD thesis, and traders looking to institute bearish strategies should be a bit more cautious given the aggressiveness with which buyers have been pushing so far today. But – there is resistance potential at prior areas of interest around 1.3087-1.3117 and 1.3181-1.3187. A bullish break back-above 1.3200 puts the bearish theme into question.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

USDCAD Continued Reversal Potential

On the short side of the US Dollar, USD/CAD remains compelling. The pair posted up to resistance last week around the 1.3500 handle, and that’s since come into help hold the highs. The complication at this point would be chasing the move lower after bearish price action has begun to build. In the webinar, I look at how traders could play short-term pullbacks to re-open the door for bearish setups.

USDCAD Four-Hour Price Chart

usdcad usd/cad four hour price chart

Chart prepared by James Stanley

USD/CHF: Time to Flip?

I had looked at the short-side of USD/CHF coming into this week, trying to catch a reversal off of two-year-highs. But, as we were looking at this in the webinar, I started to ponder an early exit, which is abnormal for me. The issue here is that the US Dollar has put an impressive pullback. But USD/CHF is just blinking while remaining near resistance, highlighting a really weak Swiss Franc. This doesn’t seem the most opportune spot to look for USD-reversals given the lack of movement that’s shown so far, dissimilar to USD/CAD above.

USD/CHF Four-Hour Price Chart

usd/chf four hour price chart

Chart prepared by James Stanley

AUD/USD Range Potential Remains

Also of interest for short-USD scenarios is a continued hold of support in AUD/USD. The .7000 big figure came into play last week and, since then, buyers have helped to hold the lows in the pair. Prices are currently struggling in the prior support zone from .7050-.7075, and this could be a theme to watch ahead of FOMC tomorrow as a push above that .7075 level can re-open the door to short-term bullish trend strategies, looking to fill-in the longer-term range. This could offer target potential in the zones from .7125-.7150 and again from .7185-.7206.

AUD/USD Four-Hour Price Chart

audusd aud/usd four hour price chart

Chart prepared by James Stanley

US Oil Rallies and Turns on Venezuelan Coup Attempt

It’s been a really busy day for Oil traders. WTI came into the week holding a zone of support around the ‘s1’ area that I’ve been following. Prices soon started to rally and that theme hit fever pitch this morning on news of a reported coup in Venezuela, at which point prices soon jumped towards resistance. But, the same 64.77 level that was in play earlier this month came back into the picture, and prices soon pushed-lower, making for a volatile showing so far today.

This sets the stage for the rest of the week, in which considerable motive will remain on both sides of the matter given the heavy economic calendar outlay. Support potential could be sought from 61.58-61.87 and a bit-lower, from 60-60.35.

US Oil Four-Hour Price Chart

us oil four hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





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