Increased selling in US Treasury yields weighed on the US dollar index Thursday, with the 10-year benchmark shaking hands with all-time lows at 1.23%. Optimistic data out of the US – durable goods and pending home sales – failed to offer much respite, with the DXY testing lows at 98.36 and marginally fading daily support priced in at 98.45.
EUR/USD jumped through 1.09 and H4 resistance at 1.0940 to test the key figure 1.10, adding more than 100 points yesterday. Circulating north of 1.10 we have December’s opening level at 1.1022, with a break highlighting H4 resistance plotted at 1.1055. Note also the relative strength index (RSI) tests overbought terrain, a touch beneath 80.00.
On more of a broader perspective, daily price is shaking hands with resistance coming in at 1.0990. A break of this base could lead to an approach towards resistance at 1.1075, positioned close by the 200-day SMA (orange – 1.1099). The weekly timeframe, however, diverts focus to the recent break of resistance at 1.0873, the 2016 yearly opening level, after bottoming off channel support, taken from the low 1.1109. This could eventually see an approach to channel resistance, extended from the high 1.1569.
Well done to any readers who remain long north of 1.08; this was a noted setup to watch for last week. Price has since moved 200 points – absolutely mouth-watering risk/reward.
Going forward, despite weekly flow suggesting increased upside, the combination of daily resistance at 1.0990 and the key figure 1.10 on the H4 timeframe, along with the RSI testing overbought territory, could hamper buying today. Therefore, short sales off 1.10, with protective stop-loss orders tucked above 1.1023, are an option today, targeting H4 support at 1.0940.
Disclaimer: The information contained in this material is intended for general advice only.