I’m reading talk of how the US$ is being lifted due to expectation that the Fed will soon raise US interest rates. However, from a charting point of view, the US$ is facing a few technical barriers that it will need to break if it is to continue on this journey.
USDX monthly: the 15+ month Flag pattern is still playing out here:
USDX weekly: the index has printed a bullish weekly candle but is still below the 95.50 S/R level.
USDX weekly Cloud: price action is still stuck in the resistance zone of the weekly Cloud:
USDX daily: technically, the cycle of lower Highs has been broken BUT I won’t be convinced of this until there is a close and hold back above the 95.50 level. Also note how there is trend line and daily 200 EMA resistance just above this 95.50 level. Now, if price action breaks and holds above all three of these resistance zones then I’d agree that US$ Bulls are on to something. I’m neither a Bull nor a Bear but just watching for any convincing trend change.
USDX daily Cloud: apart from the resistance levels noted on the daily chart above the Ichimoku Daily chart is chipping in here too with the top of the daily Cloud being in the vicinity for resistance as well.
Summary: the US$ index closed with a bullish weekly candle but still faces a lot of nearby resistance which needs to be broken to be really convincing of any new bullish trend.
Next week brings a bit of EUR-related first and second tier economic data but the calendar is fairly light on first-tier data for the US$ with Oil Inventories, Core Durable Goods, Weekly Unemployment Claims and US GDP. Some second-tier USD data might impact though with a Fed speech, Flash Manufacturing PMI, New Home Sales, Richmond Manufacturing Index, Goods Trade Balance, Flash Services PMI and Consumer Sentiment data all thrown into mix and perhaps grabbed at by US$ Bulls and Bears alike.
Whilst watching the 95.50 area I am still really waiting for a breakout from the the lengthy trading channel formed by the 100 and 92.50 levels that has been in place for over 15 months now.
NB: I am away for another week so this is just a brief update.