Dollar temporarily trades lower on softer NFP data

Yes, I do realize it’s about two weeks past the Non-Farm Payroll reports. I was, unfortunately, unable to trade the release and I think it was a good thing I missed out. The NFP figures came out softer than expected and we have seen the U.S. Dollar Index taking a hit from the 96 high in the first week of September.

U.S. Dollar Index
U.S. Dollar Index

The U.S. unemployment rate fell again to 5.1% with an average hourly earnings growing 0.3%. Despite these figures, the ultimate determinant for the a rate hike would be the inflation rate. I’m not much of a fundamentals guy so we will be breaking out the technical stuff really soon. Keep in mind that just because I do not trade heavily based off of fundamental data, I still more or less keep an eye on the economic indicator releases. As for now, I would place the rate hike closer to January of 2016 than September of 2015.

EURGBP 1-Hour
EURGBP 1-Hour

I’ve had a nice run trading the range here. My last trade stopped out just before the market close marks the break out move. Instead of comparing the Euro against the Dollar, I’m doing it against the Sterling and it looks like I won’t be giving this currency a bearish sentiment much longer. I would not go full bullish on the Euro, but rather reduce my bearish sentiment.

EURGBP 4-Hour
EURGBP 4-Hour

This is another I want to show completing the breakout pattern. This breakout is significant based on the size of that bullish candle as we headed off into the market close. Furthermore, price has several opportunities to break new lows, but was unable to do so. I might expect a temporary pull back as buyers cover their positions closer to the market open, but I would hold off on any selling at the moment.

EURUSD 1-Day
EURUSD 1-Day

I don’t really have much of an analysis going on for the EURUSD pair other than it’s currently playing off of two different ascending trend-lines marking potential entry points. As for the crucial supply zone, it sits with a bottom range at 1.540~ range. If you were to go long, there is approximately a 200~ pip move you could take. I would currently not go long until we hit a trend-line again. This is to take into consideration that the trend-line does hold up.

GBPUSD 12-Hour
GBPUSD 12-Hour

I made a post about the 1.52~ demand zone a while ago with a strong chance of holding and guess what…it held up! Unfortunately, I ended up trading the EURGBP pair instead of this and so I admit my trade was not fully optimized. Currently at this point, we are testing a potential support turned resistance zone. If we were to look across all USD pairs, the U.S. Dollar is currently on the bearish side. Therefore, I do no really expect this resistance zone to hold up. In fact, it would be a good idea to enter a long entry with a typical stop loss position and price target under the next supply zone at the 1.5790~ level.

AUDUSD 4-Hour
AUDUSD 4-Hour

I am currently still bearish on the AUDUSD pair despite the bullish close on Friday last week. I have plotted two potential fresh supply levels that I am monitoring. I believe the closer 1.7135~ price level will most likely hold up. The 120-period simple moving average also intersects at this level. Historically speaking, this simple moving average setup acts as a dynamic S/R with the potential of holding up at this price level once again. This is a double confirmation, but no guarantees it will hold.

USDJPY | USDCAD USDJPY | USDCAD

Combining two USD pairs into this chart due to simply both consolidating. There isn’t really any trade signals as of the moment because both are nearing the end of their consolidation especially for USDJPY. The 30-Minute time frame chart pretty much guarantees a breakout next week. The magnitude and direction of the breakout is not something I care to predict as I would actually observe the price behavior. It would definitely be better to remain direction neutral at the moment. USDCAD remains quite choppy, but this is due to the compressed 6-Hour time frame. It would still take a week or two before we see a breakout on this pair. As mentioned earlier, Canada has entered a technical recession so we could definitely be leaning towards an upside breakout.

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