As suspected, the US Dollar Index was only creating a lower high, before heading lower. The index went as low as 89.700, before turning around during the London session.
As a result of the Dollar selling off yesterday, intraday longs for AUDUSD cashed in around +26 pips of profit. Over the course of the London session, the Dollar regained some strength and pushed traders out of AUDUSD at breakeven. Price action on the smaller timeframes for AUDUSD suggests a possibility of shorts, which can be explored next week.
After creating a new low for the week, the Dollar printed a hammer on the daily. This is a clear indication that price is set to move higher, but how much higher? Since the downtrend on the higher timeframes is still intact, it’s hard to say that this will be a reversal. Price may instead go up to retest yesterday’s high before heading lower again.
Unlike typical Fridays, tomorrow’s fundamental schedule is fairly clear with zero high-impact releases. Markets have moved considerably this morning and there is a good possibility that things stay calm until tomorrow’s market closure.
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- Read yesterday’s breakdown: NZDJPY Almost at TP3 + EURUSD Breakout Pending
