Forex Video Briefing (7/7): USD Paring NFP-Gains
The USD/JPY retreated from last week’s high of 102.25, and is now testing some support factors just under 102. We have a rising trendline support from last week, and a broken trendline that served as resistance before. If the USD/JPY is to remain bullish, price should stay above the 101.80 level, maybe 101.75. A break below 101.70 however should invalidate last week’s bullish breakout and return USD/JPY to consolidation with a bearish bias toward the year 101.25 low, and the 100.75-100.85 lows on the year.
The EUR/USD has been bearish, on the back of a soft euro. The strong NFP report pulled the pair below 1.36 last week, but traders are finding support around 1.3580 to start this week. We are seeing a bullish correction in the 1H chart that is about to test some common resistance factors around 1.3610, which include a falling trendline that has held July’s price action so far. A break above 1.3611 and a subsequent hold above 1.36 can suggest further bullish correction. The 1.3640 level will be a key resistance in the near-term. The 4H chart shows common resistance around this area as well as a broken trendline support. If 1.3640-50 area hold, then the bearish outlook remains and a bearish continuation has the 1.3475-1.3505 lows in sight.
when we look at the USD Dollar Index in the 4H chart, we are seeing some correction against last week’s rally. Price is trading at the crossroad after a breakout of June’s falling trendline. A bullish continuation is imminent if the breakout holds. However, if price falls below 80, the bearish continuation scenario comes in play. If price instead holds above 80, and pushes above 80.40, the bullish continuation scenario is in play. This week’s FOMC Minutes on Wednesday should help traders find some direction in the short-term. A bullish outlook has the 81 high on the year in sight, but unlikely has the fuel to break above unless there are affirmation of a Fed rate hike to be in the first half of 2015. To the downside, a break and hold below 80 has the 79.75 low in sight, as well as exposes the 78.90 low on the year. On the daily chart, you see a bearish bias from prevailing price action and the moving averages giving traders USD-bears an idea to trade with the trend.