A Slight Return To Dollar Confidence

Monday’s rebound from the gaps paints quite a significant picture. Had it not been the day before FOMC then it’s significance would have been reduced but the closure of most of the gaps signals a confidence positioning into one of the most hyped and talked about risk events of the year. Of course there is nothing to prevent this positioning from reversing again on Tuesday to undo all of this confidence but a continued rebound in the dollar demonstrates the market’s willingness to build long dollar positions after the week’s opening shock.

USD% Index

Currently contained within a minor bearish channel which defines a correction lower from the main theme, the behaviour of the index around the upper range of the corrective channel will determine to outlook into tomorrow. My preference is still to own dollar long positions into the FOMC so reassurance is sought on Tuesday that this bearish channel can be broken to the upside. I am bullish USD

USD% Index Resistance (EUR/USD support): EUR/USD 1.3309, 1.3282, 1.3250
USD% Index Support (EUR/USD support): EUR/USD 1.3360, 1.3400

EUR% Index

With the gap partially filled, a drop down to support is preferred to confirm dollar bullishness into the FOMC, so Tuesday’s price action will be important to ease the market’s nerves ahead of the main risk event. Currently contained within a minor bullish correction higher, a failure of support is sought on Tuesday I am Bearish EUR%

EUR% Index Resistance: EUR/USD 1.3350, 1.3400, 1.3450
EUR% Index Support: EUR/USD 1.3283, 1.3239

JPY% Index

Although currently in a minor bullish channel signifying a correction higher, the failure to make a new high shows that the larger bearish theme has yet to be broken, with lower highs and lower lows still in place. A break of the minor bullish channel is sought today to confirm this view which may see a rejection from the recently gapped over trend line shown at USD/JPY 98.86.

I remain bearish JPY%

JPY% Index Resistance (USDJPY Support): USDJPY 98.86, 98.26
JPY% Index Support (USDJPY Resistance): USDJPY 99.66, 100.00, 100.50, 100.62

USDJPY Trade Positioning

I am long from 97.21 and I’ve added to this from 98.00, 99.50 and 100 with stops set to break-even for the basket of trades although will aim to close the long from 100 at break even if afforded the chance

GBP% Index

Yesterday’s gap was completely closed and the GBP% index remains at the top of a strong bullish trend which may see significant gains capped for now. and the beginnings of a correction lower. We still have a decent way to go before bullish trend is broken though but having gotten so close to the 1361,8% fib expansion, a push higher to meet this level would not be unexpected. Trend is still bullish until the bullish channel has failed

GBP% Index Resistance: GBP/USD 1.5967, 1.6010
GBP% Index Support: GBP/USD 1.5887, 1.5858, 1.5761

AUD% Index
AUD/CAD" title="AUD/CAD" src="https://d1-invdn-com.akamaized.net/content/picf3c3c4f6e21bd38b444787d5443fa9ba.png" height="1086" width="1916">
Following the gap and subsequent push higher we have had a decent rejection from resistance. A further completion of the gap closure will likely occur and with the sensitivity of the Australian Dollar to USD dollar movements, this well be a key barometer of sentiment into the risk event tomorrow. I am Bearish AUD

AUD% Index Resistance: AUD/USD 1.9340, 1.9384
AUD% Index Support: AUD/USD 1.9300, 1.9210

CHF% index

Another important barometer of dollar sentiment, the speed at which the CHF% index gap was closed indicates bargain hunting traders keen to buy USDCHF into tomorrow’s FOMC. This CHF selling need to be maintained today in order to prevent jitters creeping in which if confirmed on Tuesday would be good sign for dollar strength. I am bearish CHF

CHF% Index Resistance (USDCHF support): USD/CHF 0.9238, 0.9215, 0.9200
CHF% Index Support (USDCHF resistance): USD/CHF 0.9274, 0.9312, 0.9339

CAD% index

Still in a slow moving down trend and towards the top end of a cyclical pattern, I expect further downside for the Canadian Dollar from the long established trend line shown in yellow.

USD/CAD Trade Positioning

Disclosure: I remain long USD/CAD at a rejection from CAD% index trend line resistance. Order placed at 1.0326 targeting 1.0655. Stops at 1.0252.