US Dollar positioning is mixed against major counterparts after a humbling week that saw an index of the currency’s average value break below support at a key trend line. That said, the trend bias against the Euro and the British Pound looks to continue to favor the greenback, with the latter offering a clear selling opportunity.
EUR/USD
Strategy: Pending Short
Weekly Profit / Loss: +2108 pips
We first sold EURUSD at 1.5510. Earlier this week, we exited the position as US Dollar Index broke below trend line support, booking 2108 pips in profit. We now take a step back to reassess the overall trend: looking at weekly bars, we see that EURUSD is setting up a Descending Triangle, a bearish continuation pattern, broadly favoring a breakout below support marked by the double bottom near 1.2530. While near-term positioning does not yield a clear entry signal, we continue to see EURUSD losses ahead and will monitor prices for selling opportunities.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
GBP/USD
Strategy: Short at 1.5034, Targeting 1.4493 and 1.3731
Weekly Profit / Loss: -326 pips
We initially suggested selling GBPUSD at 1.4678 two weeks ago but exited the position at a loss earlier this week as the US Dollar Index broke support. Current positioning suggests the bears be setting up to reclaim dominance over GBPUSD price action: as we noted in an earlier update, the pair is showing a clear Bearish Engulfing candlestick pattern at the top of a Rising Wedge chart formation, a setup that is itself indicative of a downward reversal. Negative divergence on the RSI oscillator bolsters the case for losses in the days ahead. We will look to go short at market, initially targeting previous swing bottom near 1.45, and keep a stop-loss above the last wick high at 1.5297**. A break beyond that will expose a return to test the double bottom at 1.3731.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
USD/JPY
Strategy: Flat
The USDJPY bottom line is largely unchanged from last week: the pair is continuing to test resistance in the 99.11-99.73 congestion region. Current positioning is hinting that a Head and Shoulders top may be in the works, though prices are continuing to consolidate and there is no clear entry signal at present. We will remain on the sidelines for the time being.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
USD/CAD
Strategy: Pending Long
Last week, we booked a loss on USDCAD as prices hit our stop level. Looking back at the overall trend, things continue to look bullish despite the recent setback. The monthly chart reveals that prices clearly broke out of a multi-year downtrend in October and have been consolidating in the familiar 1.1869 – 1.2766 congestion region. Absent a close below the range bottom, the overall bullish bias remains intact. That said, the bears clearly hold momentum at the moment and it would not be prudent to enter long at current levels. We will remain flat for now, waiting for buying opportunities in the days and weeks ahead.
