Stubborn Dollar Threatens Major Breakout Against Euro and Franc

EUR/USD Technical Analysis

The Euro has gone back and forth during the early part of the Tuesday session as we find ourselves just hanging around above the 1.14 level. The 1.14 level, of course, is a round figure that a lot of people will be watching very closely, with the idea being that traders are just simply hanging out, looking for a reason to get moving. It is worth noting that we are in the midst of forming a potential bearish flag, opening up a drop down to the 1.12 level, and that would not surprise me. I like the idea of fading rallies.

USD/CHF Technical Analysis

The US dollar continues to form a bullish flag against the Swiss franc, and I do think that it is probably only a matter of time before we look to the 0.82 level. Breaking above the 0.82 level opens up the possibility of a move to the 0.84 level. Short-term pullbacks, I think, continue to see support near the 50-day EMA, which is now hanging around the 200-day EMA, and therefore, I think the so-called golden cross will probably attract longer-term bulls. This is a pair that I’ve been long in for some time, and I will be wanting to add to the upside here.

USD/JPY Technical Analysis

The US dollar initially dropped against the Japanese yen, but we continue to see a lot of noise in this pair as traders are looking for a continuation to the upside. That being said, keep in mind that the Bank of Japan recently intervened in the market, and even if they do intervene, you can see that buyers come back in to take advantage of the interest rate differential.

That’s typical in these types of markets as central banks generally intervene to keep things from getting out of hand; they’re not necessarily able to influence the market longer-term most times. At this point, I look at the 160-yen level as your floor. I like the idea of buying dips and have held for quite some time in this market.

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