Some Consolidation Ranges in the USD Crosses

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Some Consolidation Ranges in the USD Crosses

The US Dollar is starting the week with some consolidation ranges. The market is deciding what to expect from the FOMC – either some squaring up and paring of USD-strength, or the continuation of it. Let’s take a look at USD/JPY, GBP/USD, and the USD/CAD.

USD/JPY 1H Chart (9/15)
usdjpy 9/15 1h chart
(click to enlarge)

The 1H USD/JPY chart shows a very bullish market taking a break below 107.40. If price can fall below 107.00, we might be in a consolidation mode ahead of Wednesday’s FOMC meeting. A break above 107.40 however simply continues the current uptrend, which has upside risk toward 108.90-109 area, which is a support pivot and the low in 2006.

GBP/USD 1H chart (9/15)
gbpusd 1h chart 9/15

(click to enlarge)

The 1H GBP/USD chart shows market that has already pared some strength in the USD. The Sterling-US dollar pair put in a price bottom last week above 1.6052. It ended the week holding below 1.6277 and the 200-hour simple moving average. It then started trading in a small consolidation range with support above the 1.62 handle. If price breaks above 1.6280, we are likely to see upside risk toward the 1.64 this week. A break below 1.62 however returns the pressure toward the 1.6051 level. Below that the 1.60 handle is the next key level to monitor for support.

Cable could be pressured if the Scots referendum for independence succeeds. The vote is on Wednesday, which is when the FOMC meeting and press conference will be as well. USD-crosses, especially the GBP/USD will likely be very volatile during Wednesday (9/17).

USD/CAD 1H Chart (9/15)
usdcad 1h chart 9/15

(click to enlarge)

The USD/CAD was sharply bullish last week after a 2-session consolidation/correction. The pair is now respecting the 1.1100 handle as resistance. It is in a mini-consolidation with 1.1080 as support. A break below 1.1080 might open up a support/resistance pivot around 1.1030. This scenario would still be in the medium-term bullish outlook, which has the 2014-high of 1.1278 in sight.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.