Forex Video Briefing (8/5) – USDX, USD/JPY, EUR/USD React to Strong US Data
The 4H USDX chart shows a market that was bullish at least since July. It stalled at 81.55 after a non-hawkish FOMC statement and a less-than-expected NFP release on Friday. However, after finding support at 81.20 it remained bullish, and is now pushing to new highs on the year. It looks like we are ending Q2 and starting Q3 on a bright note, exposing the US Dollar index to the September 2013 highs around 82.67.
The USD/JPY should remind you of the USD Index, except its recent uptrend did not start from the start of July, but rather the last week in July. It stalled around 103, but found support around 102.35. It is now heading toward the 103 resistance again. A break above 103.10 can open up the 103.75-104.00 highs. If the market does not break above 103.10, let’s see what happens at 102.75. A break below 102.70 refocuses the short-term outlook towards the consolidation mode, while a hold above 102.75 maintains the bullish outlook.
We saw the EUR/USD edging lower before the US data points. When it fell below 1.34 it refocused price action toward the 1.3367 low from last week. USD strength on the back of strong data, is pulling the EUR/USD to fresh lows on the year, and opening up the 1.3295-1.33 lows from Nov. 2013. At this point, a break above last week’s high around 1.3345 will be needed to signal a bullish correction. Otherwise, the price remains bearish toward 1.33. Note that the 4H RSI held below 60, showing maintenance of the bearish momentum, which again points to downside risk toward the 1.33 area.