The US dollar has been very choppy during the Monday session, as we continue to consolidate around the 113.50 region. This is an area that has attracted a lot of attention as of late, and I think will continue to do so. The 113.75 level had previously been support, so now it’s acting as resistance. On the downside, it looks as if the 113.25 level is offering support. Once we break out of the purple box that I have on the chart, I believe that we will continue to build up momentum and whichever direction we break. Longer-term, I believe that the buying pressure will continue to go higher, perhaps reaching towards the 114.35 level again.
On a breakdown…
If we break down below the 113 handle, I think that the market will then go looking for the 112.50 level after that. Ultimately, a supportive candle is a buying opportunity after the breakdown, but I recognize that it could be very difficult. Ultimately, I believe that the market will try to reach towards the 115 level, but it’s going to take some time to get there. This pullback has been a bit healthy, but I believe that the market also looks at it as a possible value play. I believe that the market has been consolidating and turning around for some time, and although we will get these pullbacks from time to time, it is a nice opportunity to pick up value in the US dollar overall. After all, the Federal Reserve is looking to raise rates a couple of more times, while the Bank of Japan is certainly not going to be doing the same. Because of this, longer-term fundamental should continue to drive this pair to the upside, and offer a longer-term position just waiting to happen.
Written by FX Empire