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The EUR / USD switches to another test of 1.1300 while the US $ claims 97.00
Discussion points:
– The US dollar regained ground above the 97.00 level on the DXY chart, which is facilitated by waves of weakness in EUR / USD and GBP / USD. Around the euro, yesterday's optimism was called into question after a series of contradictory reports released this morning indicating a. that Italy was preparing to reduce its planned deficit target, followed by b. a contradictory report citing Matteo Salvini who indicates that no revised budget will be sent to the EU. Around the UK and Brexit, Theresa May had another blow while her unpopular Brexit plan continues to spark criticism.
– The rest of the week economic calendar is busy, and tomorrow brings some comments from Jerome Powell, president of the FOMC. This will probably be the focus of much attention as Fed meetings over the past two months have caused critical inflection points in macroeconomic markets. The rate hike in September marks the beginning of the current period of strength of the US dollar. and the November rate decision was what helped to mark a short-term US stock peak. Will Jerome Powell take a softer approach to the markets as we approach a much-anticipated rate hike in December? Or will he stay on the road despite the criticism of President Donald Trump?
– DailyFX forecasts on various currencies such as US Dollars or l & # 39; euro are available from DailyFX Page Guide. If you want to improve your business approach, consult Traits of successful traders. And if you're looking for an introduction to the Forex market, check out our New on FX Guide.
Do you want to see how retail traders are currently trading the US dollar? Discover our Customer sentiment indicator IG.
The euro is once again available as Italian fiscal optimism fades
There was some optimism around the single currency yesterday as the news began to spread that Italy was on the brink of easing its deficit targets. This morning saw this optimism turns to confusion like a set of contradictory reports have indicated two completely different directions: a report this morning indicated that Italy was about to reduce its deficit target for next year, which allowed to revive temporarily Italian bonds. But a little later, Italian bonds yielded gains after the publication of a report citing Matteo Salvini, who said Italy would not submit a revised budget to the EU.
For a little context: Last month, the European Commission rejected the budget of Italy the country had forecast a budget deficit of 2.4% by 2019. The European Commission wanted this figure to be no more than 2%, motivated by concerns over Italy's already high debt-to-GDP ratio and the fear that a budget deficit above the country's growth rate equals an even larger debt.
But the Italian government coalition was elected earlier this year on a platform to revive growth and development, which usually requires an initial investment in increased spending; and this put the newly elected government at odds with the European Commission. In some respects, it was the same austerity debate about growth that took place around the euro area in a previous example around Greece. But in other respects, this situation was far more threatening than it was from the world's third largest economy. the eurozone, which could have a great impact on such future situations.
When this theme took shape, it had a widespread negative effect on the euro, first appearing in April and May of this year, then returning to life at the end of September, while the budget conflict was approaching. During this period, the EUR / USD rose from an April high above 1.2400 to an annual low just above 1.1200. To date, support has remained above a key Fibonacci level at 1.1212.
EUR / USD daily price table: 2018 waves of weakness of the euro under the impetus of momentum around Italy
Table prepared by James Stanley
Enter this week, the euro had grabbed an offer while reports were circulating that the Italian Government might be willing to reduce this 2019 budget deficit to 2.2%; or maybe as low as 2.0%. This also contributed to the recovery of Italian badets and the yield spread between Italian and German bonds fell back below 3%.
But until now, the Italian government has failed to agree on these deficit reduction targets and the euro sellers have returned, perhaps badisted in part. by comments from ECB officials yesterday, denoting a slowdown in growth in the bloc. This, combined with contradictory reports this morning that continue to bring a general tone of negativity to the euro and have helped bring prices down to the 1.1300 level. This gives a new trend of low-low and low-high on the short-term charts, the current support showing just above this psychological level. This can keep the door open for short-side approaches with prices remaining below 1.1400; and the door could soon be reopened for short-term eruptions with targets set for a new annual minimum test.
Hourly price graph EUR / USD: Key approach 1.1300
Table prepared by James Stanley
The US dollar retreats above 97.00 as buying prices rise
This week opened with the US dollar down 97.00 this contributed to the closure of the resistance last week; and this is not the first time in November that we are witnessing such an event, as the week-start delay beyond this level laid the foundation for a bull trap scenario.
But after the prices ran all the way to the level of 96.00 last week, the buyers came back and continued to push higher on the chart. This trend / chain has tended to hold for more than two months, with initial support stabilizing around the September FOMC rate decision.
Daily price chart in US dollars: the two-month uptrend continues
Table prepared by James Stanley
The complication with the upside strategies of the US dollar currently is the fact that the currency looks very tense above the 97.00 level. This can also be combined with the fact that the strength of the USD has been very unequally distributed over the last, with EUR / USD and even GBP / USD showing this very clearly; pairs like AUD / USD and NZD / USD do not reflect that either. Bullish items remain on the Aussie and Kiwi, which may leave the door open to a diversified US dollar approach: seeking strength against weak currencies such as the euro or the pound sterling; while protecting against currencies that have shown a little more strength, like the AUD or the NZD.
Hourly Price Chart in US Dollars: Testing a Bullish Zone Before Difficult
Table prepared by James Stanley
GBP / USD supports the long-term trend line
The GBP / USD fell to a new weekly lows to start this week; but help is not over yet, buyers showing a key projection of the trend line. This trend line can be found by connecting the lowest of the flash crash of October 2016 to the swing-low of March 2017. This trend line projection appeared for the last time two weeks ago when the Brexit -Mayhem was in full swing, which halted the declines in GBP / USD after the unexpected resignation of the Brexit MinisterDominic Raab.
Daily price chart GBP / USD
Table prepared by James Stanley
This can be a difficult area to push short-term trend strategies. For those who want to sell the pair, there are two ways of interest: a withdrawal to find resistance when a previous support, and a price action at the beginning of the week could be sought around 1.2800. Or, alternatively, traders can look for breaks from the bottom of November around 1.2725 to open the door to avoidance up to the Fibonacci level at 1.2671. Perhaps more attractive is he on the sidelines until prices can be a longer-term form of directional movement.
Hourly Price Chart GBP / USD: Potential for Resilience in a Previous Short Term Assistance
Table prepared by James Stanley
NZD / USD Drop resistance test
I followed NZD / USD last month for weakness in USDand despite the fact that the US dollar has reached new annual highs this month, the NZD / USD has continued to show its strength. Last week, the four-month highs fell slightly, which took the form of a free-fall corner model. This is seen slightly differently by my colleague, Michael Boutros, who looks at this as a bull flag formation. But, both trends indicate higher prices and the resistance part of this corner starts to play.
Hourly Price Graph NZD / USD: Downward slope after new highs at four months
Table prepared by James Stanley
The AUD / USD holds over the key support area
Another down corner had come into play as the November opening approached. It comes from the AUD / USD after sellers began slowing to their lowest levels last month, demonstrating respect for the psychological level of 0.7000. This resulted in a possible surge to new three-month highs; after which the buyers slowed down the approach with Price action return to a key support area.
The support area in question comes from two long-term Fibonacci levels at 0.7185 and 0.7205. This support zone has so far resisted several withdrawals so far this month, and maintaining support above the support may leave the door open to bullish strategies of the pair.
Daily price chart AUD / USD
Table prepared by James Stanley
USD / CAD with another trend rebound
On the long side of the US dollar, I started looking at the USD / CAD a few weeks ago. The pair had entered a confluent support zone as taken from the Fibonacci level and a projection of the trend line around the 1.3132 area on the graph; and since then, buyers have returned in the pair for a new bounce of the trend line around a key area of past resistance.
For high-priced strategies in USD, it could be one of the most attractive candidates of the moment, given that both the Euro and the British Pound have existential themes in the form of titles that could be blurred tracks. The USD / CAD pair, on the other hand, is showing a rather clean technical backdrop for the past two months as the uptrend continues to rise.
USD / CAD price table over four hours
Table prepared by James Stanley
To know more:
Are you looking for a longer term badysis on the US dollar? Our DailyFX Forecast for Q4 have a section for every main 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 in step with short-term positioning via our Customer sentiment indicator IG.
Forex trading resources
DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for business ideas, our Sense of the client IG shows the positioning of retail traders with real transactions and positions. Our commercial guides bring our quarterly DailyFX forecasts and our best trading opportunities; and our news feed in real time has intraday interactions of the DailyFX team. And if you're looking for real-time badytics, our DailyFX Webinars offer many sessions each week in which you can see how and why we watch what we watch.
If you are looking for educational information, our New on the FX Guide is here to help new traders as our Research on the characteristics of successful traders is built to help refine the skill set by focusing on risk management and trade.
— Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
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