The US Dollar Index (DXY) is wasting no time in 2021, as the price made its way down to the 2018 low. This price action opens up the possibility of USDJPY shorts and AUDUSD longs.
Price action predicts that the DXY will revisit 89.500, before heading lower to the next weekly low. As a result of a weaker Dollar, USDJPY has cleared last year’s low and is down 0.36% for the day. Further losses for this pair is expected as the downtrend stays intact on the weekly and monthly time frames. Traders should wait for today’s daily closure before entering short.
The Australian Dollar is one currency that is wasting no time in getting ahead of the US Dollar. The pair has cleared strong weekly resistance at 0.77400 and is up +1.35% for the day. Traders should expect a pullback to the previously broken resistance before the price begins its next leg higher. In addition, the drastic difference in Covid-19 cases between Australia and the US is another indicator for further gains.
Traders should also be aware that we do have the Non-Farm Payroll release this Friday. This Friday’s job numbers will set the tone for the new year and may have a larger impact on the markets than normal. Tomorrow’s ADP numbers may give traders an idea of what the job market in the US looks like currently.
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