USD trade ideas
USD struggles to make a decisive recovery The US Dollar is trying to stage a widespread recovery on Monday as bears decided to take a breath after an aggressive sell-off over the last week. There are no any fundamental drivers behind the local rebound, which rather has to do with technical factors including the oversold conditions.
Thy key events for the greenback this week are the two-day FOMC meeting and Friday’s NFP report. The American currency won’t be able to attract a more sustainable demand unless these two events are bullish. As for the Fed, the meeting will likely be a non-event, as Janet Yellen is leaving the Central bank early February. Therefore, she will unlikely send the markets any strong signals during her last meeting, though her overall tone may have some effect on USD-pairs. If Yellen sticks to a cautious and mostly neutral rhetoric, it won’t add to the USD recovery.
The US Nonfarm Payrolls report is expected to show that employment increased 183K in January, while Average Hourly Earnings are projected to pick up from 2.5% to 2.6% YoY over the same period. If salaries really increase, the market will take it as a background for rise in inflation. But should the numbers disappoint, the sellers will make a sharp come back and may send USD index to fresh three-year lows.
USD Runs Things USD is unstoppable this week and especially today. Many strong triggers has been supporting the dollar since the beginning of the week.
Yesterday, the head of FOMC Yellen told that “gradual approach to hikes particularly appropriate in light of subdued inflation”.
Mrs. Yellen also made a very important hawkish comment: Fed should be wary of moving too gradually.
So, dollar is rolling in buyers’ love. USD Index formed a local highs at the August, 23 levels at 93.50. The yield for the two-year Treasury note surged to its maximum from November, 2008 at 1,47%, also providing support to USD.
Considering that today’s durable goods orders were pretty good with revisions to the upside we expect dollar to continue working his way forward against all the majors and gold.
Markets are waiting for Trump and the long-awaited news on the tax reform. But, the US President used to make much sound but little actions in the past.
Anyways, we expect the retracement in case of disappointments from Mr. Trump to be short-lived and the current strength of the dollar may become a sustained trend.
Wedge Breakout identification - Back testing -Back testing RSI top side resistance signals accompanied by:
MACD zero crossing
MACD trend line break
Price action wedge break
And that little lick of increased volume on the move
We will review this in the future.
