Will the US Dollar hold the range?

The market is still undecided about the US Dollar.

The US Dollar has been going up and down the range in the last 6 weeks like a rollercoaster. The range is about 500 pips for the most volatile pairs like EUR/USD and GBP/USD and 300-400 pips for less volatile pairs such as AUD/USD and NZD/USD. USD/JPY has been the slower and has traded within a 200 pip range during this time. As we have mentioned in the previous posts, USD has been the driver in all pairs and it has followed opposite directions every week. One week it was hated by everyone and went to the bottom of the range, the next it was the market’s favorite and rallied to the top without much hesitation.

Strange happenings last week: the USDX (USD index) started the week at the bottom of the range, or at the top if you take into account EUR/USD and GBP/USD. In the last two days, it gained about 200 pips against the Euro and the Pound Sterling. This was more in line with the weekly range pattern that we have seen recently but failed to make more gains. This had the USD bulls wondering if this week´s price action was going to follow the pattern, so they covered their long USD positions. The US economic data didn´t help either; in fact it was really disappointing and posted horrible numbers the entire week.

However, we still remain within the range except for the GBP/USD. It broke above the 1.50 resistance level and closed at the top around 1.52. Even NZD/USD broke above the last two months range, but this nosedived back and closed the range. Since GBP/USD has been the strongest pair last week, we think that it would be safer to open a buy signal in this pair. The first level we are looking at is around 1.51, where the 50 MA awaits and the 1.5050 which has provided resistance several times. The Euro hasn´t shown much strength last week even with all the USD weakness, so we plan to sell it against the Pound Sterling when EUR/GBP reaches 0.7200-10. We had an EUR/USD and an NZD/USD sell signal opened from Friday; the first closed at 30 pip profit while we pulled the take profit closer on the second signal. This is because it has been stubbornly strong this morning since opening with a 20 pip gap since last night.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.