Forex Video Briefing (7/25) – USDX, USD/JPY, EUR/USD, GBP/USD


[videojs mp4=”’sfomcdecision-1.mp4″]

Forex Video Briefing (7/25) – USDX, USD/JPY, EUR/USD, GBP/USD

The USDX cracked 81.00 today, and looks poised to test the 2014-highs around 81.35. Next week, if the FOMC does hint at a rate hike before mid-2015, we should expect it to push toward 81.50, the Nov 2013 high. Notice that a break above this level essentially puts in a double bottom, and signals a long-term bullish outlook, though in the short-term, we might be due for a retracement.

USD/JPY was bullish this week, but is still contained in a falling channel. Next week’s fundamentals should help it decide whether or not to stay in the channel, or breakout. The thing is, a break above the channel is still within the context of the descending triangle in the daily chart. A break above 102.50 might break this triangle and introduce a bullish outlook. Otherwise, the pressure remains toward July’s lows around 101.10 down to the 2014-lows around 100.75. Another level to monitor is around 101.50, and this week’s rising trendline. If price can’t clear below that, the bearish outlook weakens.

The EUR/USD ended the week pressing at lows. The next key support level is around 1.3295-1.33. Before that, we might be due for a correction, seeing that the daily RSI is in oversold levels. The first key resistance will be in the 1.35-1.3515 area, which was June’s support, and could be reinforced by a falling trendline. The next key resistance will be in the 1.3570-80 area. This was the support of a head and shoulders pattern. If price comes up to these levels, watch out for sellers, with downside risk toward 1.33 in the medium term.

GBP/USD has fallen below 1.70 this week. The strong US dollar is coupled with a soft British pound.The BoE meeting minutes showed some concerns about lack of wage growth. This might prevent a rate hike in 2014. We might be able to expect at least some near-term bearish outlook, but we should limit that outlook because the prevailing bullish trend still looks healthy. At least until a stronger bearish signal.

In fact, watch out for buyers when GBP/USD approaches the 1.6920 pivot and the rising trendline. A break below 1.69 then could trigger some further bearish correction. At that point, traders might consider selling on rallies.