Forex News: The Dollar Strikes Back. Bearish Price Action on the Horizon
Forex News: Monday’s trading session belonged to the bears and the US Dollar made substantial advances south, breaking key support. Part of the US Dollar demand was due to expectations that the Fed may hike rates again in March.
The bearish break of the key support at 1.2000 and the 50 period Exponential Moving Average brought in more sellers and the pair plummeted in close vicinity of the next support at 1.1945 – 1.1950. Early in today’s session we expect to see a touch of this support and if the move turns into a break of the level, the next target will become 1.1900 – 1.1875. Once the Relative Strength Index becomes oversold, the pair will likely retrace to the upside but as long as it stays below the 50 EMA, our bias is bearish.
The currencies in the pair will not be affected by scheduled major economic releases, thus the technical aspect will take center stage.
Early during yesterday’s trading session the US Dollar dragged the pair below 1.3550 but soon after it returned to the level, creating choppy price action as expected.
The pair remains in a range, without a clear direction but 1.3550 is still important for short term movement. Currently price is touching the level after an initial break so we may be dealing with a re-test, meaning that if the bulls cannot take the pair above the level, it will turn into resistance and we will see moves south. If this is true the 50 EMA will be the first target, followed by the support at 1.3500, otherwise 1.3600 will become the next destination.
Similar to the Euro and the US Dollar, the Pound will not be affected today by any notable economic data releases.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.