Dollar index closes with a doji, but sideways range likely to continue!

Dec 28 2016, 10:17 am
US Dollar Index

The U.S. dollar index closed with a doji candlestick pattern yesterday. The flat price action came amid a slow trading day with U.S. economic data showing a strong increase in the Richmond Manufacturing index and the CB consumer confidence which barely managed to push the dollar higher. Price action remains range bound from the December 15 range that was established which continues to increase the risk of a potential volatile breakout in the near term. So far, the greenback has been flat for nearly seven days. On the economic front, data today will see the pending home sales report which is expected to show a headline print of 41.6k.

EURUSD Intra-day Analysis


EURUSD (1.0475): EURUSD continues to trade within the 1.0500 – 1.0400 range but price is seen pushing modestly higher indicating another retest to the 1.0500 upper range. A breakout here is essential for further continuation to the upside as the single currency could be looking to extend the gains. On the 4-hour chart, EURUSD is seen battling the resistance zone of 1.0472 – 1.0463 which could signal a near term pull back. We continue to maintain a reversal likely to take place near 1.0400 handle. However, in the event of a breakout above 1.0500, further gains can be seen pushing EURUSD higher to 1.0533.

GBPUSD Intra-day Analysis


GBPUSD (1.2294): GBPUSD formed an inside bar from yesterday coming off Monday’s doji pattern. If the current pace of gains are maintained, we can anticipate an upside breakout in the near term. Resistance at 1.2400 will be essential as price action could see further gains on a breakout above 1.2400. On the 4-hour chart we expect a move towards 1.2400 in the near term but a higher low is required to validate a continuation. The long term target remains at 1.2571 which could be tested above 1.2400. The downside bias could be at risk in the event of another dip back to the 1.2250 – 1.2224 support level.

XAUUSD Intra-day Analysis


XAUUSD (1143.7): Gold prices have been consolidating below the 1150 handle with the current day’s bullish momentum likely to see another test to this minor resistance level. Price remains range bound from the December 15 high and low of 1144.58 and 1122.81. An upside breakout here can signal near term retracement back to 1200.00 where resistance is most likely to be challenged. To the downside, if gold prices fail to breakout above 1150, the sideways pattern could continue.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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