We definitely saw a lot of action on the dollar pair’s during last week’s trading. Lemme break it down!
The dollar gave up a lot of ground against the euro, pound, yen, and Swiss franc. Looking back, it seems that the disappointing ISM Manufacturing PMI from the U.S. set the tone for the week’s trading. The employment gauge of the report barely came in above the 50.0 headline figure and sparked speculations that the NFP report could show weakness in the labor market. It also didn’t help the dollar that the ADP report disappointed forecasts, fueling speculations that the Fed would keep quantitative easing in place for an extended time.
It wasn’t until the actual non-farm payrolls (NFP) report was released and showed positive job growth that the dollar was able to rally. Whew!
This week, I expect economic data to have a significant impact on the price action of USD pairs once again. Sure, the NFP report was better than expected. However, I don’t think the 175,000 reading has convinced markets that the Fed will withdraw some of its stimulus within the year. And so, positive U.S. reports will probably be bullish for the dollar while negative figures will be bearish.
I’ll also be paying close attention to USD/JPY. Rumors around the market is that the BOJ could intervene this week to reverse some of the yen’s gains.
On the hourly timeframe, we see that the pair has been making higher highs. If the fundamentals align with my bias, I’m gonna go long somewhere between the 50% and 61.8% Fibonacci retracement levels. I’ll look for signs of support around the 100 SMA when I pull the trigger.
I’m also looking out for a potential short on USD/CHF. It’s been on a clear downtrend, and I think I could get in a nice retracement if price manages to get back up to the 100 SMA. I’m thinking of going short once the pair shows some reversal candlesticks around the 50% to 61.8% Fibonacci retracement areas.
That’s it for today! If you guys have any setups that you think can be profitable, do let me know. It might help me formulate another trade idea!