The US Dollar has continued its rally from last week in early trading this week. Fundamentally, this is likely due to the anticipation of Friday’s unemployment rate and non-farm payrolls data announcement. The unemployment rate is expected to fall to 4.0% from April’s 4.1%. Non-farm payrolls data is expected to rise to 193K from April’s 103K figure. This will be positive data for the US economy and will add to the increased anticipation of further interest rate hikes.

On the technical side, looking at the chart of the US Dollar Currency Index (DXY), on the 4-hour chart, you can see that the price has broken out of its range which it was in from mid-January this year. Chart below:

US DOLLAR CURRENCY INDEX (DXY) – 4 HR TIMEFRAME

 

On the monthly chart, you will see that the price has reached an extremely key support and resistance area at 92.50. This is a huge break or bounce situation for the currency. A break and we could see the price rally all the way up to 104.00 but a bounce could see the price return back down to the 84.00 area. Chart below:

US DOLLAR CURRENCY INDEX (DXY) – MONTHLY TIMEFRAME

USD Currency Pairs Chart Analysis

EUR/USD

The pair is currently trading at the whole number of 1.20. This is a very key area which will give a good indication of its direction after it breaks or bounces. On the monthly chart timeframe, you can see that the price has recently been rejected by the downwards trendline, as well as the 1.25 price area. This signifies the price to begin to move back down towards the 1.15 area. Chart below:

EUR/USD – MONTHLY TIMEFRAME

On the daily timeframe, you can see that the price has recently broken through a short-term support area as well as breaking through 1.21. This does point toward further downside but, as mentioned before, 1.20 will be the key area which should be used to signify any further direction. Chart below:

EUR/USD – DAILY TIMEFRAME

GBP/USD

The pair is currently trading at 1.361. The price has drastically dropped in the past few weeks due to the increasing anticipation of a US interest rate hike, along with increasing uncertainty of a UK interest rate hike.  On the weekly chart timeframe, you can see that the price is nearing the key area of 1.36 as well as reaching the lower end of an ascending wedge. A break further below 1.36 and a break from the ascending wedge could point towards further downside to 1.34 and 1.32. A bounce from this area could point towards upside to 1.44 and 1.46. Chart below:

GBP/USD – WEEKLY TIMEFRAME

NZD/USD

The pair is currently trading at the whole number of 0.70. This is a very key area which will give a good indication of its direction after it breaks or bounces. On the weekly chart timeframe, you can see the price has recently been rejected by the 0.74 price area and has returned to 0.70. A break past this area would signal further downside towards 0.68 where the price will face further support. However, a bounce from this area will signal upside back towards 0.74. Chart below:

NZD/USD – WEEKLY TIMEFRAME

USD/CAD

The pair is currently trading at 1.285. On the daily chart timeframe, you can see the price has recently been rejected by the 1.29 price area on numerous occasions, this usually signifies an exaggerated bounce or break situation. A break past this area would signal further upside towards 1.30 and 1.31. A bounce from this area would signal downside towards 1.25. You will also see that an ascending wedge has formed, for the longer term this is worth keeping an eye on. A break below this wedge could signal downside towards 1.21 and 1.18. Chart below:

USD/CAD – DAILY TIMEFRAME

Remember that this Friday’s unemployment and non-farm payrolls data will be very key for the direction of the US Dollar. The unemployment rate is expected to fall to 4.0% from April’s 4.1%. Non-farm payrolls data is expected to rise to 193K from April’s 103K figure. This will be positive data for the US economy and will add to the increased anticipation of further interest rate hikes. This will encourage foreign investors to invest their money into the US economy, which in turn will drive the price of the US Dollar higher. Poor figures on Friday will cause uncertainty for further interest rate hikes which could cause the US Dollar to decrease in value.

NOTE: THIS IS NOT INVESTMENT ADVICE

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