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FX snapshot – Dollar Index, EUR/USD, AUD/USD, USD/JPY

Dollar weakness appears to be back on the cards following the recent resurgence.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
USD/JPY notes in a pile
Source: Bloomberg

US dollar shows renewed signs of weakness

The bounce seen in the Dollar Index last week looks highly likely to be over, with a failed attempt to break higher, coupled with a subsequent move below the $95.87 swing low. This move lower created a short-term double-top, with a projected target of $95.15. However, I would expect to see further losses in the near future yet will be looking out for a break below $95.66 first to instigate that move. Therefore, while I could see a bounce from the $95.66 support level, I would also expect any such move higher to fail in its attempt to break back towards the $96.52 peak and thus move back to the downside. In the coming days I do expect the price to deteriorate further, towards the $95.15 and $95.00 support levels.

EUR/USD strength likely to dominate week

The EUR/USD is in a similar position to the Dollar Index, except signs are pointing towards a renewed strength coming through over the coming days.

This morning we are seeing a possible evening star reversal come into play from the historically notable $1.129 resistance level. Any move lower in the near term would be deemed as exactly that, short term. As long as the price remains above $1.121 I am confident of further upside.

Support levels to watch include $1.1263, $1.1246 and $1.1242. Should we see the break higher I am looking for, the next possible resistance levels to watch are at $1.1311, $1.1364 and $1.1438.

AUD/USD triangle forms beneath resistance

AUD/USD saw a break below $0.7215 last week, bringing with it the expectations of even further misery to be poured onto the currency which has seen 35% of its value lost over the past four years. That selloff doesn’t seem to be over yet, with the price forming a symmetrical triangle. A triangle often does not have a particular directional bias, yet given the trend coming into this formation, it certainly looks like a continuation pattern to me.

Given the stepped nature of trading coming into today, it is often useful to watch the previous low to create a new resistance level, and thus $0.7215 is crucial here. In either case, a break below $0.708 would point towards a move to $0.7046 and possibly lower. Conversely, a break above $0.7215 would point towards some form of resurgence back towards $0.74. However, I favour further losses, and the upper end of this triangle is seen as an area where sellers will likely seek to enter the fray.

USD/JPY turns lower again for a renewed bearish outlook

USD/JPY is moving lower, following a failed attempt to break higher yesterday. The move below the ¥120.88 points towards the completion of the topping formation, and I believe we are now set for a substantial move lower in this pair. The ¥120.0 mark appears to be the next likely support level to hit, yet overall I believe we are set for a strong move lower in the coming days. A move back above the ¥120.145 mark would be needed to negate my bearish view.

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.