Key Areas to Watch for the US Dollar
- 103 support level is critical for dollar index
- If 103 support breaks, dollar could continue falling
- 147 support is important for UJ/USDJPY
- UJ could fall to 145 wildcard support if 147 breaks
Average Hourly Earnings and Nonfarm Payrolls Impact
- January Average Hourly Earnings Month-over-Month and Nonfarm Payrolls forecasts are bearish for dollar
- Average Hourly Earnings Year-over-Year forecast is neutral
Technical Analysis of Dollar Pairs
- Dollar Index (DXY)
- Getting rejected at 103.75 resistance
- Needs to reclaim 103.25 support to stay bullish
- Failing at downward sloping trendline resistance
- Key support around 1.3280 area on monthly chart
- Old support around 147 becoming new resistance
- Bullish if 147 support holds, bearish if it breaks
- Sell dollar pairs on breakdown below supports
- Short DXY, UJ, UC if supports break
- Buy dollar pairs on bounce from supports
- Go long GU, EU, AU, NU as dollar drops
- Critical juncture for dollar pairs with upcoming news event
- Outlook depends on reaction at key support levels
- Be ready to trade bullish/bearish based on direction after news
Forex Trading Pro Matt discusses the critical technical levels to watch on the US dollar and yen pairs going into high impact news events. He analyzes how key support at 103 on the dollar index, as well as 147 support on USD/JPY, need to hold to remain bullish.
With upcoming average hourly earnings and nonfarm payrolls data expected to be bearish for the dollar, he prepares traders to watch the reaction at support levels. If support breaks, he advocates shorting the dollar and yen pairs.
However, bounces could signal buys on Euro, Pound, Aussie and NZ instead. Using technical analysis, he identifies resistance failing on dollar/CAD and dollar/yen to plot potential breakdowns. Having predefined the range, he watches to see if prices reject at the range extremes.
With the dollar at a critical technical juncture, he stresses the importance of planning directional trades around the news event.