NON FARM PAYROLL! WHAT CAN WE EXPECT FROM THE USD NEXT?
BY BERNIE DORAN
Another month, another bullish USD as the price reaches fresh 20-year highs!
After an incredible bullish run in which the USD has only seen two slightly bearish months out of the previous 12, price reached 20-year highs in June where it then began to stall, giving the potential indication the USD may have reached exhaustion and could be ready for a pullback/retracement. These signs came in the form of consolidation, as the USD has slowed down in recent weeks and begun to range/consolidate on the daily time frame.
However, this week we have seen fresh volatility injected into the market, something the market has been lacking in the past two weeks, to help the USD break out of recent consolidation to test and then break the 20-year high created on the 15th of June.
The question now is, where is the USD heading next??
Well, with the recently closed Monthly and weekly candle closing ABOVE the Monthly level of resistance on our DXY chart, this was a strong indication sign that the bulls were in control and we could expect to see some further upside this month. This week at the start of the month the bulls have got straight to work, with a push higher so far this week where price has not only reached the next WEEKLY level of resistance but already broken through, very interesting before the NON FARM PAYROLL data release later today.
As we can see on our key levels DXY chart, the next clear level of major resistance stands at the monthly key level at 108.50. As price has broken through the weekly resistance of 106.50 and has yet to retest this level as support, this is our nearest major level of support. Our channel charts show confluence for price to extend higher to fulfill and test our channel resistance from where we can expect to see a reversal or at very least a strong retracement. At the channel resistance and monthly resistance region, we will begin to monitor for USD shorts.
In the meantime, as we can expect price overall to continue higher to reach our channel resistance we can look for bullish moves on the lower time frames. We will be waiting for the NFP data today to see how the market and USD reacts to the data to look for our next trade. A pullback towards the weekly level of support to retest it may give us new long opportunities to enter the market and ride the USD bull wave to meet our channels and monthly resistance. On a pullback, we will also expect price to meet 105.80, the recent minor resistance broken this week, as shown on our chart. If we see a bullish USD today and price reaches our channel/monthly resistance, this is where we will begin to look for shorting opportunities on the USD, therefore, selling the USD across its currency pairs such as EUR, GBP, AUD, etc.