I don´t know if you have noticed, but the environment around the US Dollar has changed since after the Christmas holidays. In fact, the game changer was the FED rate hike in December.
Until then, the USD would surge hundreds of pips on any good piece of economic data. Now, we see that every jump in the USD pairs finds sellers pretty quickly and any economic data release can´t send the Buck more than 60-80 pips higher.
On Friday afternoon, the USD buyers put up a fight after the impressive US wages data, but it only lasted until around mid-day yesterday. It reversed higher during the US trading session yesterday and it has been extending the move further this morning.
I don´t like it when the forex market becomes irrational, moving several cents against all fundamentals. It´s true, these sort of pullbacks/retraces are damn ugly, and our results board doesn´t seem so pretty now, which I´m sure will change to green in the coming sessions.
However, these retraces also form some chart patterns which are very tempting. What I like about these pullbacks is the risk/reward ratio, which is really important in forex. I´m particularly eyeing USD/JPY for a long term forex signal and EUR/USD. Perhaps we will open another sell EUR/USD signal.
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