US Dollar Talking Points:
US Dollar Reversal Continues
We’re now a week into Q4 trade and the US Dollar continues to show signs of reversal. The Greenback came into Q4 with a full head of steam, rushing up to fresh two-year-highs last Tuesday to mark the Q4 open. But, since then, a series of bad US data prints has taken the air out of those sails, and the USD continues to pull back, now working on the fifth consecutive day of losses to begin Q4 trade.
This echoes the view from our Q4 technical forecast on the US Dollar, in which a rising wedge formation was coupled with a very interesting fundamental backdrop around the US currency. As US data continues to print in a rather negative manner, shown last week in both services and manufacturing ISM reports to go along with flat Average Hourly Earnings from NFP, the potential for a deeper pullback in the US currency remains as we trade deeper into the final quarter of 2019.
US Dollar Daily Price Chart
EUR/USD Tests Trendline Resistance at 1.1000
As looked at in last Thursday’s webinar, this pullback in the US Dollar has allowed for a retracement in EUR/USD after the pair came into Q4 rushing down to fresh two-year-lows. The area around 1.1000 is confluent as a psychological level and a prior area of support, and just a bit higher is a trendline projection as taken from June, August and September swing-highs.
EUR/USD Four-Hour Price Chart
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— Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX