US Dollar 7 Week Highs; Euro Risk Aversion Remains
US DOLLAR FRESH SEVEN-WEEK HIGHS AS Q4 BULLISH THEME CONTINUES TO PUSH
The US Dollar has continued to punch higher to extend the currency’s Q4 rally, and this is coming, at least in some-part, from continued selling in the Euro as risk aversion themes continue to show. The US Dollar softening a bit after pushing up to a fresh seven-week high; and despite the impulsive nature of the move, this bullish push has some respectable structure.
We previously looked at support at the 95.00 level, as this helped DXY to catch support in both late-September and again in early-October. After another push higher, DXY then found support at the level of 95.53 after the NFP pullback last week, which was the June swing high in the currency and helped to set both support and resistance at various points throughout the summer.
And then yesterday we looked at higher low support potential around the 95.75 level, and that area helped to form the next higher-low in the currency before bulls were able to push up to fresh highs.
US DOLLAR TWO-HOUR PRICE CHART: HIGHER-HIGHS, HIGHER-LOWS, CAN THE PATTERN CONTINUE?
At this stage, we can deduce that much of this topside move in USD is coming from risk aversion, similar to what was seen in April-May and then again in early-August. As selling in the Euro continues to show, the potential for bullish continuation remains in the US Dollar. The primary complication at this point is one of chart position, as we’re fairly far away from the prior swing-low, and managing risk for continuation approaches could be a challenge considering how extended this move has become.
We are currently testing around a big level at 96.04, as this is the 50% marker of the 2017-2018 down-trend. We traded above this level earlier in the month, but bulls were unable to hold the advance and a pullback came-in shortly thereafter. But, after support set at the 95.53 level, bulls have been back on the charge.
Traders can look for higher-low support above yesterday’s swing-low of 95.68 to keep the door open for bullish continuation strategies in the currency.