Last week’s trading in the US dollar could best be described as ‘after the Lord Mayor’s show’! As traders, investors or speculators, we had all expected so much, and yet little was delivered. The interest rate decisions in Europe failed to inspire, and the NFP data on Friday failed to deliver the knockout punch that the markets had been expecting, and the FED had been anticipating. Indeed the highlight of last week was the Australian elections which helped to give the Aussie dollar some much-needed support.
So what of the US dollar on the daily index chart?
From a technical perspective the price resistance in place at the 10,820 level held firm throughout the week, and is now building into a key barrier for any short term recovery. Friday’s price action rounded off a week of see-saw movements, closing with a wide spread down candle following the less than inspiring employment data. With the floor of support now equally well established in the 10650 region, we now appear to be set for a further period of sideways price congestion for the US dollar, with a move to test this level increasingly likely in the short term. Should this fail to hold then 10,600 and below becomes the next logical target.
All of this is neatly encapsulated in the volume at price histogram on the left hand side of the chart with the deep areas of price congestion, now clearly visible. For the dollar, much will depend ( as always ) on the FED, as we now all wait for the starting gun to finally be fired, with an injection of bullish sentiment for the USD the likely outcome.
By Anna Coulling