US Dollar Looks Poised For A Correction

US Dollar Looks Poised For A Correction

By: James Ansher | Where To Trade | On:23-02-2015 15:59
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Key Highlights

  • US dollar struggled a bit during this past week against a few major currencies like the Euro and the British pound, and it looks like the US dollar is set for more losses in the near term.

  • New Zealand after finding support around the 0.7250 level corrected higher, and if buyers manage to gain control then more upside is possible moving ahead.

  • US dollar looks like forming a short-term top against the Canadian dollar, which means the USDCAD might move lower from the current levels.

  • Some key releases lined up during the London session today including the German IFO business climate index which could affect the Euro in the short term.

  • In the US, the existing home sales report will be released, which is expected to remain stable.

  • EURUSD and GBPUSD pairs need to gain momentum if more gains are required.

NZDUSD

The New Zealand dollar after finding support around the 0.7180 level corrected higher against the US dollar. However, there is a major bearish trend line formed on the weekly chart of the NZDUSD pair, which is likely to act as a catalyst in the near term. Currently, the pair is facing hurdle around the 23.6% fib retracement level of the last leg from the 0.8903 high to 0.7180 level where the New Zealand dollar buyers were seen struggling. There is a worrying sign, as the weekly RSI is below the 50 level, which means the pair is still in the downtrend. However, a correction is likely moving ahead.

Intraday Support Level – 0.7420

Intraday Resistance Level – 0.7580

  • Overall, as long as the pair is below the highlighted trend line it might continue trading lower.

  • A break above the same could mean a change of trend moving ahead.

If the NZDUSD pair moves lower from the current levels, then initial support can be seen around the 0.7400-20 area where the New Zealand dollar buyers might appear. A break below the same might expose a run towards the last low, which is the next hurdle for sellers.

USDCAD

The US dollar surged higher against the Canadian dollar, but it looks like the USDCAD pair stalled around the 1.2800-10 area. The pair is now correcting lower towards the 23.6% fib retracement level of the last leg from the 1.0542 low to 1.2797 high. The weekly RSI is around the extreme levels, which means the pair might move further lower in the near term. However, there is a major support trend line on the weekly chart, which might act as a hurdle for the US dollar sellers moving ahead. Let us see how the pair trades from here.

Intraday Support Level – 1.2440

Intraday Resistance Level – 1.2600

  • Selling rallies around the last high look like a good option.

  • A break above the same might call for more gains moving ahead.

On the downside, the highlighted trend line might continue to act as a pivot area for the pair. However, an immediate support is around the 1.2400 area.

James Ansher

James Ansher

When there is a will there is a trade

A successful Forex trader and expert advisor

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