USD Under Pressure: Trading The EUR/USD
Shain Vernier • 2 min read
The greenback has been under siege all session long due to the ongoing geopolitical situation between the U.S. and North Korea. To put it mildly, the current news cycle has not been kind to the buck.
Fundamentals have come to the forefront and dictated either rotation or weakness from the USD across the majors.
Today’s session has seen the EUR/USD trade below and above yesterday’s extremes. This observation really doesn’t mean a whole lot, other than it is a sign that this market is indecisive.
During times like these, I like to take a look at the broader picture for perspective and maybe a trade idea or two.
EUR/USD Weekly Chart
Currently, the EUR/USD is in heavy rotation. The daily chart is compressed and remains moderately bullish. A quick look at the weekly time frame gives us a few relevant levels to work with:
Last week’s high of 1.2069
Big round number of 1.2000
Last week’s low of 1.1822
Spike (June) to spike (August) 38% retracement at 1.1706
These are simple levels. But, they have some value. Last week’s high and low will be hotly contested and draw participation. Overall, my bias remains bullish. However, I am expecting consolidation around our big psychological level of 1.2000.
Trade Idea: In this type of market, I have no problem fading last week’s extremes. A buy near last week’s low or sell near the high are positive 1:1 risk/reward entries. Until the EUR/USD opens up a bit, playing rotation is a solid approach.
FED Members Back In The Spotlight
Later on today, FED members Kashkari and Kaplan are due to speak. As we near the FOMC meeting on the 20th of this month, any comments out of the ordinary may drive volatility facing the USD. It is a good idea to monitor the headlines that come out of these comments.