Upcoming Webinars for Week of January 14 to 19, 2018
Monday at 7:30 EST/12:30 GMT: FX Week Ahead: Strategy for Major Event Risk
Wednesday at 6:00 EST/11:00 GMT: Mid-week Trading Q&A
Thursday at 7:30 EST/12:30 GMT: Central Bank Weekly
See the full DailyFX Webinar Calendar for other upcoming strategy sessions
Amid news that German Chancellor Angela Merkel would finally be able to cobble together a coalition government, the EUR/USD has found itself shaking off whatever political risk that it’s carried since the September elections. EUR/USD break above 1.2100 today signals not only a fresh high for 2018, but its highest exchange rate in three years.
To no surprise, given that the Euro is 57.6% of the DXY Index, the aggregate gauge of the US Dollar has been slammed lower today, taking out not only the yearly low but the low from the September 20 FOMC meeting day as well. Now that this bullish outside engulfing bar’s support has been broken, there is little standing in the way of the DXY Index taking a trip down to the 2017 low at 91.01.
Early price action in 2018 suggests that, for now, a bearish outlook for the US Dollar remains appropriate. On the daily timeframe, MACD and Stochastics continue to trend lower in bearish territory, while price holds below the daily 8-, 13-, and 21-EMAs.
A closer look reveals that during the early-2018 rally by the US Dollar, the DXY Index never crossed the daily 21-EMA; until we see a close back above this moving average, there is no reason to think that this current stretch of weakness for the greenback is finished.
See the above video for technical considerations in the DXY Index, EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, NZD/USD, and US Treasury yields.
Read more: Central Bank Weekly: USD Ignores Rising Odds; CAD Eyes Hike Next Week
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail firstname.lastname@example.org
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.