The U.S. Dollar is catching some resistance this morning after a rather strong three-day advance. As we looked at yesterday, this move of strength in the Dollar helped to bring on retracements in those bullish trends in EUR/USD and GBP/USD. On the daily chart below, we can see the 2017 down-trend in the U.S. Dollar with emphasis on this recent advance as a retracement of that move. The zone around the August highs, running from 94.08-94.30, could be key for those looking to stage a bigger-picture bullish reversal in the U.S. Dollar. But, if we’re unable to take out those highs, and as long as we remain below that area of resistance, the bearish trend persists, and this could spell an interesting occasion to look for a turn into the general trend-side direction.
U.S. Dollar via ‘DXY’ Daily: Down-trend persists, resistance showing sub-94.00
Chart prepared by James Stanley
This USD resistance has shown at an interesting juncture for EUR/USD. As we looked at yesterday, there’s a big zone of support in the pair that runs from 1.1685-1.1736. This area is demarcated by two different long-term Fibonacci levels, but perhaps more importantly – this zone has shown practical usage after helping to cauterize the lows in EUR/USD throughout August. At the time of publishing yesterday, price action had just started to test the top-end of this zone. So far, that support has held up, and on the chart below we can see where a projected trend-line is likely assisting matters.
EUR/USD Daily: Finding Support at a Confluent Zone
Chart prepared by James Stanley
While EUR/USD had already started testing that support when we published yesterday, GBP/USD had a little ways to go before encountering the support zones that we’ve been following. AS GBP/USD began to retrace after the bullish breakout that started at the BoE’s rate decision two weeks ago, a bull flag formation had started to form. But as prices continued to trickle-lower, that support zone that runs from 1.3321-1.3350 came-in, and bulls responded by pushing prices higher.
