Dollar Bulls had a great week last week – especially if they were swing trading. Comments out of the FOMC along with Trump’s testimony to congress saw the 10Y yield move back up to the top of its range bringing some very nice Yen weakness and Dollar strength into the market. With no NFP on Friday the markets were paying careful attention to Yellen who didn’t specifically say that March is live though did mention, and I quote, “at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.” Currently the FOMC view the labor market as strengthening and they see inflation rising towards their 2% target. So that means all eyes on NFP next Friday.

Yellen also mentioned twice that scaling back accommodation will not be as slow as it was during the past couple of years though everything is data dependent. Taking a look at the FedWatch Tool the market is definitely pricing in a hike at the March meeting with the chance of a 75 – 100 bps hike sitting at 79.7% up significantly from the previous week. According to the Beige Book overall economic activity in all 12 districts has expanded at a modest to moderate pace with labor markets remaining tight in early 2017 and little change in pricing pressures. While we did not receive the headline number for NFP on Friday ISM Non-Manufacturing data on Friday came in better than expected with a reading of 57.6 vs. the expected 56.5 which was the same as Feb’s reading. We’ll get ADP, the challenger report and weekly jobless claims next week. Next Friday’s NFP is a biggie so make sure you trade that live with Wayne McDonell at FXStreet!

UST Daily

As far as technicals are concerned we have our 10Y T-Note at the bottom of the range after coming off the top of the range at the start of last week. A range trader would look to trade this back to the top of the range which would mean they are expecting some Yen strength and/ or Dollar weakness in the day's ahead. While that makes sense technically, fundamentally one might believe that the market is going to continue pricing in a March hike and so would be keeping a close eye on the zone between the new weekly central and WM3 as this is where bears are going to enter and that would then mean looking to USDJPY for Yen weakness and/ or USD strength.

USDJPY H4

Range traders are eyeing a support of 112 at the bottom of the range with price having come off 114.50. We did see some Yen strength/ Dollar weakness at the end of Friday's session though do keep in mind that price was at the level where we expect weekly swing traders (Bulls) to take profit with Bulls eyeing the levels somewhere between the new weekly central and WM2 for re-entry next week. And if you believe that the market will continue pricing in a March hike then that's most likely your trade plan on USDJPY currently. Personally I would like to see USDJPY move up to 155.50/ 116.50 during March so that I can dump it hard heading into April, so come on NFP! As you can see I entered a short position at 114.50/ MR1 which was just above WR2. This is my cheeky monkey counter-trend trade. I'll move my buy limit to the new weekly central at market open tonight. How beautiful is the move from WM2 to the weekly target? Gorgeous swing trade.

EURUSD H4

If you sold EURUSD last week then you would have been very happy with your swing trade off WR1 with a target of WS1 - and to the pip. Price is moving back up to MPP/ top of the range and if you are a bear you have spent all weekend praying to the Forex gods for price to open at WM3 for this week's swing trade down to WM1 while paying careful attention to 1.05 as the bottom of the current range.

GBPUSD H4

Another great weekly swing trade on Cable, though this one took a little more chutzpah with price being so close to the bottom of the range. As you can see price smashed through the weekly target of WS2 only to find support at WS3 and an expected move back to the new weekly central where bears would look to go short somewhere between weekly central and WM3. If you are a bull then you must have entered a counter trend trade at WS3.

AUDUSD H4

I was looking to sell AUDUSD at WR1 though price never made it that high. Bears sold off of the weekly central and drove price right down to WS3 with 0.76 now marking the bottom of the previous range. Pivot theory says that price will return to the new weekly central. Bears looking to go short between WPP and WM3 and bulls having bought at WS3.

NZDUSD H4

Another gorgeous swing trade on NZDUSD with Bears selling at WM3 and driving price all the way down to 0.70. Another pair where we expect price to return to the new weekly central with Bears looking to short between WPP and WM3 and bulls having bought at 0.70.

USDCAD H4

I would have to say the trade of the week on the USDollar pairs, for me personally, was USDCAD. If you follow the BOC then you knew markets were not expecting any action. Also with oil at the top of the range it was a setup made in heaven. Bulls entering at WM2 and driving price all the way up blowing through WR3 with some profit taking on Friday bringing us back just below 1.34. Pivot theory indicates that price will return to the new central where Bulls will look to enter between WPP and WM2 with Bears having sold at MR1.

2 thoughts on “So where are we on the Dollar? 5 March ’17”

  1. John Noltensmeyer says:

    It’s amazing how many USD pairs respected the weekly pivot points last week – almost to the pip.

    1. Ryan Gandalf van Jaarsveld says:

      Absolutely

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