The US Federal Reserve have held off on increasing US interest rates due to concern about global growth and this has given the US$ more room for pause. Whilst there has not been any breakout just yet on either FX index weekly chart it does seem that both could be about to turn contrary to their respective Flag patterns. It may take a few sessions for the markets to digest FOMC news before this translates into any potential breakout so keep an eye on the FX indices weekly chart trend lines.
NB: please note that there will not be an FX Index update tomorrow as I am at a trading conference.
USDX:
USDX weekly: no Bull Flag breakout here just yet and the shift, for now, appears to be towards the lower trend line. Any break and hold below this trend line would have to bring the congested 87/86 region into focus as this is near the 61.8% fib of the latest swing high move, near the weekly 200 EMA and also near the previously broken monthly chart triangle trend line. Thus, there are lots of reason for price action to target this region:
USDX 4hr: price is below the 4 hr Cloud:
USDX daily Cloud: price is below the daily Cloud:
USDX weekly Cloud: price action has been above the weekly Cloud for over one year but it is now back down testing the support of this region. Any break back down into, and then below, the Cloud would support a continued bearish bias:
EURX:
EURX weekly: no Bear Flag breakout here just yet and the shift, for now, appears to be towards the upper trend line. Any break and hold above this trend line would bring the 105.5 region into focus as this is near the 61.8% fib of the latest swing low move and near the weekly 200 EMA. Thus, there are lots of reason for price action to target this region:
EURX 4hr Cloud: price is above the 4hr Cloud:
EURX daily Cloud: price is above the daily Cloud and, thus, the FX Indices are back into alignment:
EURX weekly Cloud: price action has been below the weekly Cloud for over one year here as well but it is now back up testing the bottom level of this region. Any continued move up into this Cloud, and break and hold above, would support a continued bullish bias here:
Summary: There has not been any FX index Flag breakout just yet on either the USDX or EURX weekly charts BUT their weekly Ichimoku Cloud charts show them about to test regions of major S/R. Any continuation moves here could suggest a polarity shift for both indices. Add to this that the FX indices are back in alignment for SHORT US$ and LONG EUR. Periods of FX index alignment often, but not always, result in decent trending markets so keep an eye on the index weekly Flag patterns for any breakout to support this alignment. If so, keep an eye out for any return to classic style ‘Risk On‘.
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