US$ on Struggle Street: By Mary McNamara

Friday’s underwhelming US CPI resulted in the US$ index printing a bearish candle for the week, albeit an indecision-style Spinning Top candle. The EURX wasn’t too much better though printing an indecision-style Doji, albeit bullish coloured. There hasn’t been any ‘flight to safety’ movement into the US$, unlike with Gold and the Yen, and so it looks to be heading back to test 92.50 support being the level to watch next week for any new make or break. A break and hold below 92.50 would bring 85 into focus as this is the weekly chart’s 61.8% Fibonacci level.

USDX weekly: The index has failed to break and hold back above the weekly 200 EMA and this had been support since mid 2014. Whilst a bounce or pause at this major level might have been expected the failure to hold back above this region is rather bearish and suggests that this level is now resistance.

However, recall I had said that the US$ longer-term uptrend remains intact until such time as it breaks and holds below the 61.8% fib of the most recent weekly swing high, and this level is down near 85.

I still also note with interest that if you place Fibonacci retracement on the recent swing low move, since the start of 2017, then the 61.8% fib level is up near the previous S/R level of 100. Thus, I will be watching this 100 level if there is any recover move above the weekly 200 EMA.

Keep watch of the following levels in coming sessions:

  • the weekly 200 EMA: this was support but is now resistance
  • the previous S/R level of 92.50.
  • the bottom trend line of the symmetrical wedge pattern.
  • the weekly swing high 50% Fibonacci level; down near 88.
  • the weekly swing high 61.8% Fibonacci level; down near 85.
  • the weekly swing low 61.8% Fibonacci level; up near 100 if there is any recovery move.

USDX daily: couldn’t break and hold back above the weekly 200 EMA:

EURX weekly: heading for the round-number 110?

FX Index alignment: the FX indices are not currently aligned but it wouldn’t take much more EUR strength to achieve this.

Calendar: German GDP and US Retail Sales might set the tone to start the week:

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