The USD has been strong but all good things must come to an end….right?!
The USD has been the main focus for a long time now as US inflation runs out of control and the US Fed are forced to aggressively raise interest rates.
With the interest rate differential favouring holding the USD in favour of other majors such as AUD, GBP and EUR, it has been all one way action. The majors have been constantly under pressure as funds continue to flow into the USD but it is a crowded trade so its time to look for potential trading opportunities.
Below are the Four Major FX Pairs both on the Daily and Hourly timeframes. I have added some commentary and a opinion of what I am looking for in a price action trading setup.
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The USD is heading higher on the Daily Chart and found sellers at a lower level. This to me is important as we may be seeing bulls run out of steam…which could see the start of an unwind from buyers. I feel that this will depend on the Fed hitting rate rises hard to bring down CPI (inflation).
The AUDUSD may have lost some mojo after the RBA disappointed bulls with a smaller than expected rate rise. With the continued strength into the USD, the Aussie has been heading south. If the USD starts to top out, then expect bulls to provide some support. Watching to see if 0.6195 can hold or whether we will see a move into 0.5950 prior to any rally.
The Euro has has been under enormous pressure which does mean that traders are all stacked up one way. Once the USD starts to find some sellers, there may be a big short squeeze on the cards for the EURUSD. I like the hourly chart for a minor long for now if price can hold above 0.9676…could see a push back up to parity.
The Pound has had all sorts of issues the last few days driven by some economic and political mess. The daily chart looks extended after a good flush lower but the hourly timeframe may be building another short setup. Watching for a break down below 1.1162 then 1.0923.
The USDJPY, in my view, is one to watch for a short as the Bank Of Japan battle YEN short sellers. The trend up remains firmly in tact, but when the time comes for a short, there will be a lot of juice in a trade as USD longs and YEN shorts both unwind. Watching for a clear lower high setup but for now expecting a grind up.
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