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US dollar trading levels for the FOMC

Jason Sen

The US Dollar Index outlook has turned positive after holding important Fibonacci support at 93.45/40. We are now holding above key resistance at 9360/65 for a confirmation buy signal, indicating the bull trend, which started in February, has resumed.

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Bulls need a break above minor resistance at 9390/95 today for another buy signal targeting 9410, 9430/35, perhaps as far as 9461/65. A re-test of the May high at 9500/02 would not be a surprise. Bears are only back in control on a break below the June low at 9321.

For AUD/USD, failure to beat resistance at 7630/60 turns the outlook neutral/negative. On the downside we target 7600/7595, 7550 and 7520/15. On further losses look for 7495/90 and 7475.

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Gains are likely to be limited if seen on the FOMC announcement, with first resistance at 7585/90 and strong resistance at 7605/15. It’s very unlikely but, if we see 7630/40, try short positions with stops above 7660.

The NZD/USD outlook is negative as we fail to beat strong Fibonacci resistance at 7055/60. Moves to the downside target 7020/15, 6995/90 and 6970 before support at 6950/45.

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The first resistance at 7015/20 could hold a rally but obviously we have the best selling opportunity at 7055/60, with stops above 7075. An unexpected break higher, however, is a medium-term buy signal targeting 7120/30 and 7180/90.

The EUR/USD short-term chart shows a potential inverse head-and-shoulders bullish pattern. However, we only managed a 100-pip rally from the neckline break, when the measured target was at least twice that. I have seen an increasing number of failed head-and-shoulders patterns recently so I believe there is a good chance this one will fail too.

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As you can see in the chart above, the pair is sitting on the neckline as we re-test it. Note how well the red 200-period moving average is working as resistance.

Holding below the 23.6% Fibonacci on the daily chart provides a more negative outlook as the slow stochastic starts to turn lower. There’s a good chance the two-month bear trend will resume, therefore, targeting 1.1720/10, 1.1680/70 and possibly as far as 1.1640/30 into the end of the week.

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Bulls initially require a break above 1.1790/1.1800 to turn the outlook more neutral. A break above the 1.1840 recovery high then puts them back in control, in the short term at least.

For USD/CAD the key to direction today is strong resistance at 1.3030/40. A break above 1.3070 is a very strong buy signal, targeting 1.3130/40 and 1.3205, but further gains look likely as far as 1.3260/70.

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Failure to beat strong resistance at 1.3030/40 targets 1.2990/80 and 1.2960, before support at 1.2935/25.

USD/JPY breaks above the 200-day moving average at 110.20 for a buy signal, initially targeting 110.65/75 (hit as I write). On further gains look for 111.05/10, the May high at 111.35/39 and perhaps as far as the six-month trendline resistance at 111.80/90.

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Bulls must obviously hold the pair above first support at 110.25/15. A move below 110.00, however, is less positive and risks a slide to 109.70/60.

Jason Sen

Technical Analyst & Trader

For more information, trading education and offers visit Intertrader

The content of this article is the personal opinion of the author and not Intertrader. You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is not investment advice. The information provided is believed to be accurate at the date the information is produced.

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