The US Dollar has pulled back considerably since risky assets began to rebound in early March, shedding as much as -7.8% on average against its top counterparts. Now, all signs appear to suggest that the greenback is ready to resume upward momentum, setting up attractive entry opportunities against the spectrum of major currencies.
EUR/USD
Strategy: Short at 1.5510, Targeting 1.2456
Weekly Profit / Loss: +173 pips
We first sold EURUSD at 1.5510. The pair reversed last week’s gains and is now once again positioned ahead of 1.31, a level that has acted as both support and resistance in recent months. Prices are showing a Hammer candlestick, suggesting a shallow upswing may be in the cards ahead. Still, the series of lower highs since the latest major up move topped out in mid-March point to a bearish bias. We will remain short, looking for a break of near-term support to challenge the double bottom near 1.2460 once again.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
GBP/USD
Strategy: Pending Short
Weekly Profit / Loss: -380 pips
Two weeks ago, we sold the British Pound at 1.4450 noting bearish next-day confirmation following a Dark Cloud Cover candlestick pattern. Last week, the rebound in risky assets took sterling higher at the expense of the US Dollar, taking out our stop-loss and booking 380 pips in losses. Still, our bias remains bearish as we see bullish momentum giving way to form a potential double top ahead of the 1.50 mark. Bearish cues are significant, with a Spinning Top followed by a pair of progressively lower Hammer candlesticks. Still, we see it prudent to proceed with caution as prices resolve support 1.4860, a level that has market the tops of the previous two upswings. A daily close below this level will open the door to renew our short position. Updates will be posted on the Candlestick forum.
