The US Dollar remained under pressure last week, upsetting expectations of a return to bullish momentum as healthy gains in risky assets kept the safe-haven asset du jour on the defensive. Although last week proved costly, current positioning suggests the bias for US Dollar remains bullish against the major currencies.
Strategy: Short at 1.5510, Targeting below 1.2456
Weekly Profit / Loss: -312 pips
We first sold EURUSD at 1.5510. The pair now looks to be confined in a bearish channel with prices showing a Shooting Star candlestick hinting at the possibility that bullish momentum has run its course. General US Dollar positioning suggests the bullish bias remains intact. We will look for confirmation on the close of the current candle to confirm the reversal, aiming for the bears to take the pair to the channel bottom (currently at 1.2742). A break lower will open the door to test the double bottom at 1.2456.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
GBP/USD
Strategy: Short at 1.4678, Targeting 1.3731
Weekly Profit / Loss: -129 pips
Last week, we suggested selling GBPUSD at 1.4678 as prices broke out of a rising wedge formation established from late February to early March. After a period of sideways trading, GBPUSD has retraced to re-test support-turned-resistance at the wedge bottom. Prices are showing a Shooting Star formation and hinting at a downward reversal from here. We will remain short and continue to target a return to the double bottom at 1.3731, keeping a stop-loss at 1.5083 above the 04/16 wick high. **
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
USD/JPY
Strategy: Flat
Last week, we opted to tread with caution and hold off on a long USDJPY position as the pair tested support at a rising trend line established from the low in January. This proved wise – the pair broke lower to meet a familiar support/resistance region above 96.40, putting in a Hammer candlestick and rallying to re-test resistance in the 99.11-99.73 congestion region. We will remain on the sidelines, waiting for the pair to yield greater clarity on how price action will proceed at this juncture.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
USD/CAD
Strategy: Pending Long
Weekly Profit / Loss: -249 pips
We initially bought USDCAD 1.2188. Last week we noted the pair had broken above resistance at the top of a falling wedge formation. It now seems this conclusion was premature, as an equally valid drawing of the wedge sees prices remain within the confines of the pattern. Indeed, last week’s downswing to the updated wedge bottom tripped our stop-loss at 1.1939. On balance, the implications of the falling wedge setup as well as overall US Dollar positioning remain bullish and we will look for signs of reversal in the days ahead to re-enter long, targeting initial resistance at 1.2670 but aiming for a break higher to challenge the major top near 1.30.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
AUD/USD
Strategy: Pending Short
Weekly Profit / Loss: -241 pips
Last week we sold AUDUSD at 0.7123 after prices put in Hanging Man candle with next-day bearish confirmation and crashed through support at a rising trend line established since early March. Unfortunately, a stray wick on a Doji candlestick tipped our stop-loss at 0.7364 and knocked us out of the position despite the lack of a meaningful change in positioning. As it stands, signs of bullish reversal in overall US Dollar positioning suggest the Doji may herald a downward reversal in the days ahead. We will look for bearish next-day confirmation on the current candle and position to re-enter short.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
NZD/USD
Strategy: Short at 0.5644, Targeting 0.4910
Weekly Profit / Loss: -21 pips
Last week we sold NZDUSD at 0.5644. As with the other majors, recent price action has seen the pair move against us while healthy gains in risky assets kept the safe-haven greenback on the defensive. Losses have been minimal however and prices remain well-removed from our stop-loss. Meanwhile, the pair seems to be setting up a Head and Shoulders bearish reversal formation with a neckline at 0.5525. We will remain short, looking for a close below this neckline to open the door to a decline to the previous swing bottom at 0.4910. As before, we will maintain a stop-loss at 0.5997 above the 04/06 wick high. **
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
** Stop-loss orders are activated on a daily close breaching the specified price level.
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