US Dollar Might Continue Trading Lower

US Dollar Might Continue Trading Lower

By: Simon Furman | Where To Trade | On:24-04-2015 10:43
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Key Highlights

  • US dollar traded sharply lower recently against a basket of currencies as the recent economic releases in the US missed the mark and ignited a correction phase in the US dollar in the short term.

  • US Federal Reserve Bank of Kansas City, which is a quarterly Survey of Manufacturers and provides information on current manufacturing activity in the Tenth District came in at -2 in April 2015.

  • Japanese Corporate Service Price Index (CSPI), which helps in measuring the prices of services traded among companies released by the Bank of Japan registered a reading of 3.2% in March 2015, compared to the same month a year ago whereas the last increase was of 3.3%.

  • Japanese All Industry Activity Index highlighting the monthly change in overall production by all industries of the Japanese economy released by the Ministry of Economy, Trade and Industry will be released later.

  • Today in the Euro Zone, the German business sentiment index will be released by the CESifo Group, which is expected to increase from the last reading of 107.9 to 108.45 in April 2015.

USDJPY

The US dollar struggled a lot recently during the past couple of sessions against many major currencies including the Japanese yen. There is a bullish trend line on the 4-hour chart of the USDJPY pair, which is helping buyers to hold the ground. However, the pair remains at risk of more downsides in the near term and a break below the same might call for more losses. There is a positive sign to note from the chart i.e. the fact that the 200 and 100 simple moving averages are sitting just below the trend line. Let us see if the pair can move higher from the current level or not.

Intraday Support Level – 119.20

Intraday Resistance Level – 120.00

  • Overall, as long as the pair is above the highlighted trend line it might continue moving higher.

  • A break below the same could ignite more losses in the short term.

If the USDJPY pair moves higher from the current levels, then the 120.00 swing area might act as a major barrier for the US dollar buyers.

EURJPY

The Euro managed to gain a lot of ground against the Japanese yen after trading towards the 126.00 level. However, the pair is currently struggling around the 200 simple moving average (SMA) – 4H, which is around a bearish trend line. So, there is a major hurdle around the 129.55 level where buyers are facing a lot of resistance. There is a chance of a move back lower in the near term, which might find support around the 100 SMA (4H). The 4H RSI is above the 50 level, which is a positive sign.

Intraday Support Level – 128.60

Intraday Resistance Level – 129.50

  • Buying dips around the 100 SMA (4H) looks like a good option.

  • A break below the same might call for more losses.

On the upside, a break above the highlighted trend line might call for a run towards the 130.00 level.

Simon Furman

Simon Furman

Think Global - Act Local

Simon Furman is one of the best financial analyst with 27 years of trading experience

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