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February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00

February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00, FP Markets

EUR/USD:

Monthly timeframe:

Brought forward from previous analysis:

Long term, EUR/USD’s primary trend has faced a southerly trajectory since topping in mid-July 2008, at 1.6038. Activity on the monthly chart remains languishing south of a resistance area at 1.2048/1.1653 as well as a trendline resistance (1.6038).

Downside risk remains on this timeframe until connecting with the support area marked at 1.0742/1.0333. Note the pair trades lower by 2.27% on the month.

Daily timeframe:

Since retesting 1.1109/1.1066, the unit has retained a strong underlying offer, consuming a support zone at 1.0962/1.0925 and recently tunnelling deep within a support zone at 1.0822/1.0879, boasting history as far back as March 2016. Continued downside from here, and assuming a break of 1.0822/1.0879, the pathway appears clear on this timeframe to 1.0947/1.0582, another support zone.

The RSI also drove further into oversold territory – currently trades at 23.82.

H4 timeframe:

1.0826/1.0851, a support area drawn from mid-October 2016, is under threat. Reinforcing this zone is a 161.8% Fibonacci ext. point at 1.0839. Note this H4 zone also resides within the lower boundary of the daily timeframe’s current support zone at 1.0822/1.0879.

Should the market maintain a bearish presence and overthrow the current H4 support zone, a large gap is visible beneath here (April 23rd 2017), with the next layer of support falling in around the 1.0680/1.0704 region. Therefore, a decisive push lower from current price could prompt additional losses in this market.

H1 timeframe:

Short-term development shows EUR/USD continued its demise Thursday, breaking yesterday’s low and the 1.0850 mid-round number. The fall appears to be taking cues from a strong US dollar index, which firmed above the 99.00 handle. US inflation figures did little to sway the action.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in January on a seasonally adjusted basis, after rising 0.2 percent in December, the US Bureau of Labour Statistics reported. Over the last 12 months, the all items index increased 2.5 percent before seasonal adjustment. The index for all items less food and energy rose 0.2 percent in January after increasing 0.1 percent in December.

Technically, the candlesticks remain within a descending channel formation (1.1014/1.0964), poised to approach the 1.08 handle. The general sense is a push for 1.08 from here. Indicator flows still has the RSI attempting to climb from oversold terrain, rebounding from familiar RSI support around 20.13.

It may also interest traders to pencil in both the 100/50-period SMAs, dipping south since the 50-period value crossed its slower counterpart at the beginning of February.

Direction:

Attacking 1.08 today implies a break of daily support at 1.0822/1.0879 and the H4 support area at 1.0826/1.0851, likely tapping sell stops.

Potential bearish scenarios may develop at the underside of 1.0850 today, particularly at the point the level merges with channel resistance on the H1 from 1.1014. Aside from 1.08, the ultimate downside target rests at the top edge of monthly support from 1.0742.

February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00, FP Markets

AUD/USD:

Monthly timeframe:

Brought forward from previous analysis:

Following a retest at the underside of a resistance area drawn from 0.8409/0.8082 in early 2018, AUD/USD has been grinding lower, down nearly 1500 points since.

June 2018 witnessed a long-standing trendline support (1.4776) give way, followed by the 0.6827 January 2016 low in August 2019. This, technically speaking, suggests scope for further downside to 0.5986/0.6346, a long-term support zone.

Currently, the pair trades +0.42% on the month.

Daily timeframe:

Snapping a three-day winning streak, the Australian dollar retreated against its US counterpart Thursday, shedding 0.27% from the lower border of a resistance zone at 0.6770/0.6751.

In the event we continue to explore lower ground from here, support at 0.6670 is in the firing range. A move higher, on the other hand, could approach trendline support-turned resistance level (0.7393).

The RSI, for those who follow indicators, is seen emerging from oversold territory, though has so far failed to connect with the 50.0 value.

H4 timeframe:

Brought forward from previous analysis:

After scoring a fresh lower low at 0.6662 late last week, breaking the previous swing low 0.6679, traders likely seek short sales on the correction, based on the H4 timeframe.

Trendline resistance (0.7031) elbowed its way into view Wednesday, with price action topping just south of the level in the shape of three successive bearish wicks.

Thursday saw a test of the said trendline take shape, formed by way of a strong bearish candle close. This could be enough to convince sellers, though the concern remains that price may want to bring in sellers from the neighbouring resistance area priced in at 0.6783/0.6769 (joined closely with a 38.2% Fibonacci retracement at 0.6765 and the 50.0% retracement at 0.6770) before turning lower.

H1 timeframe:

Based on shorter-term flows, buyers and sellers are battling for position within a range between a support zone at 0.6707/0.6715 and a resistance area coming in at 0.6750/0.6742. Also noteworthy is the 100-period SMA (0.6714) offering support.

Direction:

The fact we crossed paths with a daily resistance area at 0.6770/0.6751, connected with a H4 trendline resistance (0.7031) along with room to explore lower ground on the monthly timeframe, a breakout beyond the lower edge of the current H1 range is likely. Watch for a H1 close to form beyond 0.67. This helps identify seller intent and could be sufficient to drive back to daily support at 0.6670.

February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00, FP Markets

USD/JPY:

Monthly timeframe:

Brought forward from previous analysis:

Since kicking off 2017, USD/JPY has been busy carving out a descending triangle pattern. The breakout for this pattern is common to the downside, but an upward breakout is considered more reliable and profitable.

Outside of the current configuration, a resistance area is visible at 121.36/124.23, while lower on the curve we have a support area visible at 98.83/101.42.

Currently, the pair trades +1.32% on the month.

Daily timeframe:

Brought forward from previous analysis:

Despite a reasonably healthy recovery since August 2019, the resistance area at 110.73/110.31, along with a long-term trendline resistance (114.54), has capped upside. As can be seen from the daily timeframe, price is attempting to brush through the said trendline resistance, though is once again failing.

Should we eventually overthrow the said zones, immediate resistance resides close by in the form of a channel resistance (109.48) and a 78.6% Fibonacci retracement at 110.71 (red level). A rejection, on the other hand, has a support area at 108.21/108.51 to target, along with the 200-day SMA (108.38) and channel support (106.48).

H4 timeframe:

Resistance at 110.09 remained in the fold Thursday, pressuring price action back to support pencilled in at 109.68. Although the level does not look much in terms of size, the base is housed within the current daily resistance area at 110.73/110.31 and merges with daily trendline resistance.

A violation of the current support level could stage a drive towards the support area seen at 109.16/109.29, in motion since mid-December 2019.

H1 timeframe:

Risk-off flows in the early hours Thursday triggered a flight to safety after an unexpectedly large jump in reported coronavirus cases and deaths.

USD/JPY reclaimed the 110 handle, came within a whisker of retesting the base as resistance (price respected nearby trendline support-turned resistance [108.31]), before swerving to lows of 109.62. As seen from current price, the 100/50-period SMAs (109.83/109.88) hold price lower, which could encourage additional selling to 109.50, and beyond today.

Direction:

With the 100/50-period SMAs capping upside, this could be a potential location to seek intraday bearish themes, with an initial downside target at 109.50. While we are coming from daily resistances, there’s still a threat of buying on the H4 timeframe from support at 109.68.

February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00, FP Markets

GBP/USD:

Monthly timeframe:

Brought forward from previous analysis:

Early February 2018 saw the pair reject 1.4520/1.3893, a 50.0% retracement and 38.2% Fibonacci retracement combination (red).

In recent months, though, the market witnessed longer-term flows retest the underside of a resistance area at 1.3699/1.3503. continued selling is a possibility on this timeframe, targeting a support area at 1.1899/1.2217.

Currently, the pair trades at -1.16% on the month.

Daily timeframe:

Recording its fourth successive bullish close, GBP/USD is poised to tackle a local trendline resistance (1.3514), with a break revealing a resistance area noted at 1.3269/1.3165.

In terms of support on this scale, we have the 1.2816/1.2719 area plotted, located a few points ahead of the 200-day SMA (1.2688).

H4 timeframe:

In recent sessions on the H4 timeframe, the February 5th high 1.3070 was challenged, with price marginally paring gains into the close. This level, a potential double-top formation (red arrows), is also closely positioned to a 61.8% Fibonacci retracement at 1.3079.

An upward lift, however, tips price in favour of an advance to 1.3211/1.3170.

H1 timeframe:

Cable initially traded firm Thursday though the resignation of Chancellor Javid witnessed a period of downside, although losses were quickly faded, with GBP/USD rallying to highs around 1.3070ish.

As of current price, the technical reading has the candles retesting a potential area of support from 1.3028/1.3045, following a break of 1.30 in strong fashion. Follow-through buying has the 1.31 handle in view.

In terms of where we’re positioned on the RSI, the value recently tested overbought waters, following a rally above its 50.0 mid-way point.

Direction:

Buying out of the current H1 support zone at 1.3028/1.3045 is problematic, knowing H4 tests a reasonably visible high at 1.3070. However, there is room for daily price to gravitate higher.

The 1.31 handle is an interesting level. Not only is the level a widely watched number by and of itself, it comes together with daily trendline resistance. Therefore, short sales from here are an option.

February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00, FP Markets

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

 

 

 

 

 

 

 

 

 

 

  • February 14th 2020: Dollar Continues To Flex Its Financial Muscle, Breaking 99.00, FP Markets
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