US Dollar Price Action Pre-NFP: EUR/USD, GBP/USD, USD/CAD

It’s been a busy week in the US Dollar as the bullish reversal continues to take-hold. This was in the spotlight during January trade as a number of reversal formations began to set up. Even coming into the New Year, the US Dollar carried bullish potential as shown by a falling wedge pattern. Falling wedges are denoted by a more aggressive slope from trendline resistance compared to what’s showing at or around support. These can often show up around market bottoms with oversold conditions, and will often be approached with the aim of bullish reversals.

And for much of January, price action remained at least somewhat indecisive, gyrating in either direction; but along the way another formation popped up as an inverse head and shoulders pattern built-in. Similarly, this formation will often be approached with the aim of bullish breakouts, and as the door has opened into February trade, that’s precisely what’s happened so far. I talked about this at length in the Tuesday webinar, and I had also highlighted this scenario in last week’s Analyst Pick.

Tomorrow’s calendar brings one of the most-followed US data releases with Non-farm Payrolls. This report is being released at the same time as Canadian jobs numbers, setting up for a very interesting scenario in USD/CAD, which we’ll look at a little later. But – for the US Dollar, price action has been long and strong, with prices bursting up to a fresh two-month-high. And with a couple of major banks revising expectations for tomorrow higher around the NFP report, the bar will be high for USD bulls to continue the break. But – if they can, there’s a major level around the 92.00 handle that may come into play if/when the breakout extends.

US DOLLAR EIGHT-HOUR PRICE CHART

US Dollar Price Chart

Chart prepared by James StanleyUSD, DXY on Tradingview

EUR/USD BREACHES 1.2000 – CAN SELLERS TAKE IT DOWN?

Perhaps one item of surprise this week has been how quickly EUR/USD gave-up around the 1.2000 handle. When this psychological level came into play as resistance back in September of last year, it led to a strong reversal that lasted for more than a few weeks and accounted for almost 400 pips.

1 2 3
View single page >> |

Disclosure: See the full disclosure for DailyFX here.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.