Talking Points:
- EUR/USD rejects its daily 8-EMA, fades under $1.1000 again.
- EUR/AUD eyes a retest of the recent A$1.5165/70 low.
- See the DailyFX economic calendar for the week of November 1, 2015.
The USDOLLAR Index may have tried to signal an attempt at a short-term top, but thus far, traders aren't complying. The USDOLLAR Index has found support at its daily 8-EMA since October 21, and the decline the past few days failed to produce a closing low under this mean reverting level. Accordingly, whereas the USDOLLAR Index itself may lack consistency among its constituents, trade setups across USD-pairs remain plentiful.
Of note, EUR/USD's rejection of its daily 8-EMA since the October 22 ECB meeting has largely mirrored price action in the USDOLLAR Index. The sustained break below the March, April, July, and August uptrend - and subsequent rejections of the September-October support turned resistance region of $1.1085/1.1100 after the breakdown - confirmed by daily MACD and Slow Stochastics trending deeper into oversold/bearish territory, gives greater confidence for a move lower into $1.0800 in the coming days and weeks (ideally before the December ECB meeting).
If EUR/USD represents the most bullish setup for the US Dollar among the constituents of the USDOLLAR Index, USD/JPY might be next in line with the most bullish potential. While we continue to monitor the ¥118.20 to ¥121.80 two-month range, USD/JPY has found itself supported by its daily 8-/21-/34-EMA envelope in recent days, and with Slow Stochastics and MACD starting to edge higher, a long entry for a breakout is eyed.
While the other USD-pairs, AUD/USD and GBP/USD, aren't necessarily suggesting weak outcomes for the greenback moving forward, their respective charts don't offer much in terms of confidence about their next moves. If anything, the short-term neutrality in AUD/USD and GBP/USD, in context of EUR/USD recent declines, means that EUR/AUD and EUR/GBP should have few obstacles dropping further.
See the above video for technical considerations in EUR/USD, GBP/USD, USD/JPY, AUD/USD, and the USDOLLAR Index, as well as in EUR/AUD, and EUR/GBP.
Read more: USDOLLAR Index Lacks Conviction at Top as EUR/USD Steadies
--- Written by Christopher Vecchio, Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
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