USD struggling: CPI & FOMC may define the next big $ move by Mary McNamara

USDX

Monthly: The December candle is currently printing a bearish coloured ‘Long Legged Doji’ and is back below the 2010 highs.

USDXmonthly

Monthly Ichimoku: The December candle is trading well above the monthly Cloud.

USDXmonthlyCloud

Weekly: Last week’s candle closed as a bearish engulfing and bearish-reversal ‘Railway Track’ candle.  

USDXweekly

Weekly Ichimoku: Price is still trading ABOVE the weekly Cloud though.

USDXweeklyCloud

Daily: Price chopped a bit lower last week after peaking up just under the major 90 resistance level.  There were four bearish days out of the five but the index continues to hold above a recent support trend line: 

USDXdaily

Daily Ichimoku Cloud chart: Price traded above the Cloud all week and there is still an open bullish Tenkan/Kijun cross in play.

USDXdailyCloud

4hr: Price chopped lower to start the week but recovered on Thursday after strong Retail Sales data.  That was the one bullish day however as price dipped on Friday following weaker than expected PPI data. The 6 week duration support trend line can be clearly seen here.

USDX4

4hr Ichimoku Cloud chart: Price chopped down through thin Cloud band last week and, despite a bounce on Thursday, ended up closing below the Cloud. This chart is divergent from the daily chart and suggests choppiness.

USDX4hrCloud

EURX

Monthly: The December candle is currently printing a bearish coloured ‘Doji’. I am still seeing a larger-scale bullish ‘inverse H&S’ pattern developing here though.

EURXmonthly

Monthly Ichimoku: The December candle is trading within the monthly Cloud.

EURXmonthlyCloud

Weekly: The weekly candle closed as a bullish coloured ‘Inside’ candle. This chart could still be considered as a Bear Flag though!

EURXweekly

Weekly Ichimoku: Price is still trading below the weekly Cloud.

EURXweeklyCloud

Daily: Price mostly chopped sideways to higher last week. There were three bullish days out of the five as price continued to hold above a recent support trend line.

EURXdaily

Daily Ichimoku Cloud chart: Price is still trading above the daily Cloud.

EURXdailyCloud

4 hr: Price chopped lower and then higher last week.

EURX4

4 hr Ichimoku Cloud chart: The EURX traded up through thin Cloud and closed above the Cloud.  As surprising as this seems, this chart is aligned with the daily chart and suggests long EUR.

EURX4hrCloud

Comments:

USDX: the USDX closed lower for the week despite last week’s bullish break above two main resistance levels; the 88.50 and 89 levels. Price has now pulled back and closed the week below both of these levels but it did find support from a recent 6-week duration trend line. The 90 level is above current price and is a long term S/R level that is the next major hurdle for the index to navigate.

The weekly candle close was bearish and has set up with two bearish patterns: a bearish-reversal ‘Railway Track’ and a bearish engulfing candle pattern. This is a tad ominous following Friday’s weaker than expected PPI data and especially noteworthy given that next week is a HUGE data week for the USD. I imagine that Wednesday’s US CPI data will be keenly watched as a bearish print would, most likely, further undermine the USD. There is also FOMC on Wednesday and so this could be a defining week for the USD; one where we either see a continuation of this lengthy bull run or the start of some kind of decent pullback.

The levels to watch here next week include the 90 level above and the 6 week support trend line below current price. Obvious pull back targets include the previously broken monthly triangle trend line and then the 83 region which is near the monthly and daily 200 EMAs and the 61.8% fib level of the recent bull run.

EURX: the EURX had a bullish week but the candle print was an indecision style ‘Inside’ candle so probably isn’t too much to get excited about. Also, there is a ‘Bear Flag’ look to the weekly chart and so trend line breaks will be worth watching for here.

This index continues to hold up well though despite the gloomy fundamental EZ picture. Divergence between the Eurozone and US economies continues to be a dominant theme BUT the ‘long USD’ trade still seems a bit battle worn and the EURX is capitalising on this lull.  The EURX has managed to hold above the daily Cloud and this is a small but encouragingly bullish signal. I still have my eye on the bullish ‘inverse H&S’ building on the monthly chart although a deeper pullback within this overall pattern is still entirely feasible!

Note: The analysis provided above is based purely on technical analysis of the current chart set ups. As always, Fundamental-style events, by way of any Ukraine, Ebola, Eurozone or Middle East events and/or news announcements, continue to be unpredictable triggers for price movement on the indices.  These events always have the potential to undermine any technical analysis.

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