US Dollar Talking Points:
- It was a big week in the headlines with the election on Tuesday and FOMC on Thursday.
- Along the way, the US Dollar tested a trendline taken from 2023 and 2024 swing highs, which has held. But the reaction after that showed strength on Friday after the FOMC rate decision.
- For next week, Fed-speak is back on the radar as FOMC members are now out of the blackout window, and Wednesday morning brings the next release of US CPI. PPI is released on Thursday and retail sales on Friday, so there will be several data points for FX traders to work with.
- I’ll go over the USD in-depth from multiple vantage points in the webinar on Tuesday, and you’re welcome to join: Click here for registration information.
It was a big week for markets and at this point, it seems both the election and FOMC rate decision were well received by equity markets. After an initial pop higher in 10-year yields on the back of the election, even yields have softened with some help from Jerome Powell on Thursday.
The 10-year started the week with a test of a major spot at 4.34%, which is the same level that marked the high in yields in 2022. When that level was crossed in 2023, equity markets began to show pain until the 5% mark came into play, which led to a strong move-lower in 10 year rates.
At this point the weekly bar is showing as a doji with 10-year yields softening back below 4.34% and given the massive run that showed in the aftermath of the 50 bp cut in September, this is likely a dose of relief to many.
US 10-Year Rates, Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar
That run-higher in longer-term rates accompanied a massive move of strength in the US Dollar after the Q4 open. October was the strongest month for the greenback since September of 2022.
Last week with the November open, the move had started to stall as shown by the doji on the weekly; and this week opened with a pullback as we move into the election on Tuesday. But – the support that I had looked at in the pre-election webinar at 103.32-103.46 held the lows, leading to a catapult of a move on Wednesday as Trump won the Presidency. That move ran vividly through Wednesday until, eventually, resistance showed at a trendline taken from last October and this July’s swing highs. That prodded a pullback into FOMC but, so far, that pullback has been well-defended.
US Dollar Weekly Price Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar Shorter-Term
The reaction around the FOMC rate decision was messy. Initially, USD-strength appeared as the Fed removed a key phrase from the rate cut statement, which had previously noted that the bank felt confidence that they had inflation under control. Deductively, the fact that this statement as not there yesterday, market participants started to think that the run-higher in long-term rates may cause a shift at the Fed.
And previously in the Fed’s projections at the September meeting, the bank had highlighted expectation for many more cuts over the next two years.
During the press conference, however, Powell sounded fairly dovish while also avoiding saying anything that could be construed as forward guidance. He directly countered the removal of the phrase pertaining to inflation, however, during the Q&A when directly asked.
The follow-through response in the 24 hours after that rate cut has been decisively bullish in the US Dollar as support held at 104.38, allowing for a move up to 104.80 resistance. Then bulls pushed beyond that, as well, to drive above the 105.00 handle. And at this point, buyers remain in-control of the shorter-term trend in the greenback.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar Moving Forward
Given the reaction in the USD where prices are now higher than they were than at the FOMC meeting yesterday, I would continue to look towards the broader bullish trend as we move into next week. And, as always with DXY, we must consider the fact that this is a composite of underlying currencies, so also important is what’s going on in currencies such as the Euro, Yen, or Canadian Dollar, which I’ll look at below.
But at this point bulls have shown no sign of relinquishing the reins despite numerous open doors for bears to take control over the past week.
The economic calendar will likely have some sway in the week ahead and Fed-speak is back on the radar as a driver. The FOMC is now out of the blackout window and Fed members are free to opine to the press, which could hold sway over USD and broader macro trends. On Wednesday, we get the next look at inflation with CPI and PPI is released the following day. On Friday, we’ll get a look at retail sales and that’s a great report to follow as it’s an early look at consumer behavior for the most recently completed month.
From the daily chart, there were two vigorous responses from bulls at support this week at 103.32-103.46 and then at 104.38, so I’m going to assume they’re continued control until price suggests otherwise.
For support, 104-104.07 is of interest, particularly if early-week Fed-speak is decisively dovish. For resistance, 105.51 and 105.77 sit overhead, and it’s the 106.50 level that sticks out as a longer-term item as this held a double top in April and May before the DXY sell-off really took over.
US Dollar Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
For USD-strength scenarios I still like EUR/USD. Speaking to that failure from bears in DXY over the past week, there was a similar failure from bulls in EUR/USD. There was a strong bounce from 1.0700 after the initial run from the election. That bounce ran up to 1.0825, at which point sellers took back over and drove right back down for a test of the big figure. That type of rejection denotes continued bearish potential, particularly if we see next week’s inflation data come out strong to prod the USD-higher.
EUR/USD Four-Hour Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
EUR/USD Longer-Term
On a longer-term basis the range in EUR/USD still applies. Support from earlier in the year showed at a Fibonacci level plotted at 1.0611 and that’s on the radar for next support. That can be spanned up to another Fibonacci level at 1.0643 to create a zone of interest just below the current lows.
And below that, it was the 1.0500 level that sellers failed to run with last year, and that remains a longer-term item of note if we do see EUR/USD weakness and USD-strength extend through next week.
But it’s those upper wicks on the past two weekly bars that say a lot, as this was two different failures from bulls to run with a bounce, as they were quickly and aggressively offset by sellers driving prices to fresh lows. So, while the longer-term range still applies, the intermediate-term trend has been decisively bearish.
EUR/USD Weekly Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
USD/CAD
For the past couple weeks, I’ve been tracking USD/CAD for USD-weakness scenarios. And while the USD is higher over the past week, USD/CAD is not. So – if we do see a reversal in the greenback, I still like USD/CAD for scenarios of US Dollar weakness. A large part of that reason is the longer-term look as the pair has continued to stall inside of the 1.4000 psychological level over the past four years.
USD/CAD Weekly Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/CAD Shorter-Term
Perhaps more interesting is how the pair reacted when we had legitimate shows of USD-weakness last week.
When DXY pulled back ahead of the election, eventually finding support at that 103.32-103.46 area, USD/CAD showed a strong sell-off until support played at a Fibonacci level plotted at 1.3822.
The Wednesday bounce in DXY that extended to a fresh high there merely matched the prior high in USD/CAD, setting up a possible double top formation (provided that high can hold). And then when USD-weakness appeared on Thursday, USD/CAD held a higher-low, at the zone around 1.3850.
Trading reversals or calling tops is notoriously difficult and challenging but this type of behavior, with the deduction noted above, is one of the driving facts that can make something like that more interesting. And if we do see the USD turn, the idea would be like the two episodes showing earlier this week, where USD/CAD turns a bit harder given the inclusion of some CAD-strength.
USD/CAD Daily
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/CAD Shorter-Term: The Double Top
Double top formations are objective setups: They require an equal top with a neckline, which is simply the low between the two highs. But – if the high gets taken-out before the neckline does, the formation is invalidated, and this remains a possibility in USD/CAD.
But – if the neckline gets taken out, the formation triggers, and this opens the door to bearish breakout potential.
I think for this scenario to play out we’d need to see both dovish Fed-speak and weak inflation data on Wednesday. And while that would likely bring bounced to major pairs like EUR/USD and GBP/USD, USD/CAD could be better positioned given the longer-term backdrop, to take advantage of that USD-weakness.
USD/CAD Four-Hour Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
--- written by James Stanley, Senior Strategist
US Dollar Talking Points:
- It was a big week in the headlines with the election on Tuesday and FOMC on Thursday.
- Along the way, the US Dollar tested a trendline taken from 2023 and 2024 swing highs, which has held. But the reaction after that showed strength on Friday after the FOMC rate decision.
- For next week, Fed-speak is back on the radar as FOMC members are now out of the blackout window, and Wednesday morning brings the next release of US CPI. PPI is released on Thursday and retail sales on Friday, so there will be several data points for FX traders to work with.
- I’ll go over the USD in-depth from multiple vantage points in the webinar on Tuesday, and you’re welcome to join: Click here for registration information.
Indices AD
It was a big week for markets and at this point, it seems both the election and FOMC rate decision were well received by equity markets. After an initial pop higher in 10-year yields on the back of the election, even yields have softened with some help from Jerome Powell on Thursday.
The 10-year started the week with a test of a major spot at 4.34%, which is the same level that marked the high in yields in 2022. When that level was crossed in 2023, equity markets began to show pain until the 5% mark came into play, which led to a strong move-lower in 10 year rates.
At this point the weekly bar is showing as a doji with 10-year yields softening back below 4.34% and given the massive run that showed in the aftermath of the 50 bp cut in September, this is likely a dose of relief to many.
US 10-Year Rates, Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar
That run-higher in longer-term rates accompanied a massive move of strength in the US Dollar after the Q4 open. October was the strongest month for the greenback since September of 2022.
Last week with the November open, the move had started to stall as shown by the doji on the weekly; and this week opened with a pullback as we move into the election on Tuesday. But – the support that I had looked at in the pre-election webinar at 103.32-103.46 held the lows, leading to a catapult of a move on Wednesday as Trump won the Presidency. That move ran vividly through Wednesday until, eventually, resistance showed at a trendline taken from last October and this July’s swing highs. That prodded a pullback into FOMC but, so far, that pullback has been well-defended.
US Dollar Weekly Price Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar Shorter-Term
The reaction around the FOMC rate decision was messy. Initially, USD-strength appeared as the Fed removed a key phrase from the rate cut statement, which had previously noted that the bank felt confidence that they had inflation under control. Deductively, the fact that this statement as not there yesterday, market participants started to think that the run-higher in long-term rates may cause a shift at the Fed.
And previously in the Fed’s projections at the September meeting, the bank had highlighted expectation for many more cuts over the next two years.
During the press conference, however, Powell sounded fairly dovish while also avoiding saying anything that could be construed as forward guidance. He directly countered the removal of the phrase pertaining to inflation, however, during the Q&A when directly asked.
The follow-through response in the 24 hours after that rate cut has been decisively bullish in the US Dollar as support held at 104.38, allowing for a move up to 104.80 resistance. Then bulls pushed beyond that, as well, to drive above the 105.00 handle. And at this point, buyers remain in-control of the shorter-term trend in the greenback.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar Moving Forward
Given the reaction in the USD where prices are now higher than they were than at the FOMC meeting yesterday, I would continue to look towards the broader bullish trend as we move into next week. And, as always with DXY, we must consider the fact that this is a composite of underlying currencies, so also important is what’s going on in currencies such as the Euro, Yen, or Canadian Dollar, which I’ll look at below.
But at this point bulls have shown no sign of relinquishing the reins despite numerous open doors for bears to take control over the past week.
The economic calendar will likely have some sway in the week ahead and Fed-speak is back on the radar as a driver. The FOMC is now out of the blackout window and Fed members are free to opine to the press, which could hold sway over USD and broader macro trends. On Wednesday, we get the next look at inflation with CPI and PPI is released the following day. On Friday, we’ll get a look at retail sales and that’s a great report to follow as it’s an early look at consumer behavior for the most recently completed month.
From the daily chart, there were two vigorous responses from bulls at support this week at 103.32-103.46 and then at 104.38, so I’m going to assume they’re continued control until price suggests otherwise.
For support, 104-104.07 is of interest, particularly if early-week Fed-speak is decisively dovish. For resistance, 105.51 and 105.77 sit overhead, and it’s the 106.50 level that sticks out as a longer-term item as this held a double top in April and May before the DXY sell-off really took over.
US Dollar Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
For USD-strength scenarios I still like EUR/USD. Speaking to that failure from bears in DXY over the past week, there was a similar failure from bulls in EUR/USD. There was a strong bounce from 1.0700 after the initial run from the election. That bounce ran up to 1.0825, at which point sellers took back over and drove right back down for a test of the big figure. That type of rejection denotes continued bearish potential, particularly if we see next week’s inflation data come out strong to prod the USD-higher.
EUR/USD Four-Hour Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
EUR/USD Longer-Term
On a longer-term basis the range in EUR/USD still applies. Support from earlier in the year showed at a Fibonacci level plotted at 1.0611 and that’s on the radar for next support. That can be spanned up to another Fibonacci level at 1.0643 to create a zone of interest just below the current lows.
And below that, it was the 1.0500 level that sellers failed to run with last year, and that remains a longer-term item of note if we do see EUR/USD weakness and USD-strength extend through next week.
But it’s those upper wicks on the past two weekly bars that say a lot, as this was two different failures from bulls to run with a bounce, as they were quickly and aggressively offset by sellers driving prices to fresh lows. So, while the longer-term range still applies, the intermediate-term trend has been decisively bearish.
EUR/USD Weekly Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
USD/CAD
For the past couple weeks, I’ve been tracking USD/CAD for USD-weakness scenarios. And while the USD is higher over the past week, USD/CAD is not. So – if we do see a reversal in the greenback, I still like USD/CAD for scenarios of US Dollar weakness. A large part of that reason is the longer-term look as the pair has continued to stall inside of the 1.4000 psychological level over the past four years.
USD/CAD Weekly Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/CAD Shorter-Term
Perhaps more interesting is how the pair reacted when we had legitimate shows of USD-weakness last week.
When DXY pulled back ahead of the election, eventually finding support at that 103.32-103.46 area, USD/CAD showed a strong sell-off until support played at a Fibonacci level plotted at 1.3822.
The Wednesday bounce in DXY that extended to a fresh high there merely matched the prior high in USD/CAD, setting up a possible double top formation (provided that high can hold). And then when USD-weakness appeared on Thursday, USD/CAD held a higher-low, at the zone around 1.3850.
Trading reversals or calling tops is notoriously difficult and challenging but this type of behavior, with the deduction noted above, is one of the driving facts that can make something like that more interesting. And if we do see the USD turn, the idea would be like the two episodes showing earlier this week, where USD/CAD turns a bit harder given the inclusion of some CAD-strength.
USD/CAD Daily
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/CAD Shorter-Term: The Double Top
Double top formations are objective setups: They require an equal top with a neckline, which is simply the low between the two highs. But – if the high gets taken-out before the neckline does, the formation is invalidated, and this remains a possibility in USD/CAD.
But – if the neckline gets taken out, the formation triggers, and this opens the door to bearish breakout potential.
I think for this scenario to play out we’d need to see both dovish Fed-speak and weak inflation data on Wednesday. And while that would likely bring bounced to major pairs like EUR/USD and GBP/USD, USD/CAD could be better positioned given the longer-term backdrop, to take advantage of that USD-weakness.
USD/CAD Four-Hour Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
--- written by James Stanley, Senior Strategist
US Dollar Talking Points:
- It was a big week in the headlines with the election on Tuesday and FOMC on Thursday.
- Along the way, the US Dollar tested a trendline taken from 2023 and 2024 swing highs, which has held. But the reaction after that showed strength on Friday after the FOMC rate decision.
- For next week, Fed-speak is back on the radar as FOMC members are now out of the blackout window, and Wednesday morning brings the next release of US CPI. PPI is released on Thursday and retail sales on Friday, so there will be several data points for FX traders to work with.
- I’ll go over the USD in-depth from multiple vantage points in the webinar on Tuesday, and you’re welcome to join: Click here for registration information.
Indices AD
It was a big week for markets and at this point, it seems both the election and FOMC rate decision were well received by equity markets. After an initial pop higher in 10-year yields on the back of the election, even yields have softened with some help from Jerome Powell on Thursday.
The 10-year started the week with a test of a major spot at 4.34%, which is the same level that marked the high in yields in 2022. When that level was crossed in 2023, equity markets began to show pain until the 5% mark came into play, which led to a strong move-lower in 10 year rates.
At this point the weekly bar is showing as a doji with 10-year yields softening back below 4.34% and given the massive run that showed in the aftermath of the 50 bp cut in September, this is likely a dose of relief to many.
US 10-Year Rates, Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar
That run-higher in longer-term rates accompanied a massive move of strength in the US Dollar after the Q4 open. October was the strongest month for the greenback since September of 2022.
Last week with the November open, the move had started to stall as shown by the doji on the weekly; and this week opened with a pullback as we move into the election on Tuesday. But – the support that I had looked at in the pre-election webinar at 103.32-103.46 held the lows, leading to a catapult of a move on Wednesday as Trump won the Presidency. That move ran vividly through Wednesday until, eventually, resistance showed at a trendline taken from last October and this July’s swing highs. That prodded a pullback into FOMC but, so far, that pullback has been well-defended.
US Dollar Weekly Price Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar Shorter-Term
The reaction around the FOMC rate decision was messy. Initially, USD-strength appeared as the Fed removed a key phrase from the rate cut statement, which had previously noted that the bank felt confidence that they had inflation under control. Deductively, the fact that this statement as not there yesterday, market participants started to think that the run-higher in long-term rates may cause a shift at the Fed.
And previously in the Fed’s projections at the September meeting, the bank had highlighted expectation for many more cuts over the next two years.
During the press conference, however, Powell sounded fairly dovish while also avoiding saying anything that could be construed as forward guidance. He directly countered the removal of the phrase pertaining to inflation, however, during the Q&A when directly asked.
The follow-through response in the 24 hours after that rate cut has been decisively bullish in the US Dollar as support held at 104.38, allowing for a move up to 104.80 resistance. Then bulls pushed beyond that, as well, to drive above the 105.00 handle. And at this point, buyers remain in-control of the shorter-term trend in the greenback.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
US Dollar Moving Forward
Given the reaction in the USD where prices are now higher than they were than at the FOMC meeting yesterday, I would continue to look towards the broader bullish trend as we move into next week. And, as always with DXY, we must consider the fact that this is a composite of underlying currencies, so also important is what’s going on in currencies such as the Euro, Yen, or Canadian Dollar, which I’ll look at below.
But at this point bulls have shown no sign of relinquishing the reins despite numerous open doors for bears to take control over the past week.
The economic calendar will likely have some sway in the week ahead and Fed-speak is back on the radar as a driver. The FOMC is now out of the blackout window and Fed members are free to opine to the press, which could hold sway over USD and broader macro trends. On Wednesday, we get the next look at inflation with CPI and PPI is released the following day. On Friday, we’ll get a look at retail sales and that’s a great report to follow as it’s an early look at consumer behavior for the most recently completed month.
From the daily chart, there were two vigorous responses from bulls at support this week at 103.32-103.46 and then at 104.38, so I’m going to assume they’re continued control until price suggests otherwise.
For support, 104-104.07 is of interest, particularly if early-week Fed-speak is decisively dovish. For resistance, 105.51 and 105.77 sit overhead, and it’s the 106.50 level that sticks out as a longer-term item as this held a double top in April and May before the DXY sell-off really took over.
US Dollar Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
For USD-strength scenarios I still like EUR/USD. Speaking to that failure from bears in DXY over the past week, there was a similar failure from bulls in EUR/USD. There was a strong bounce from 1.0700 after the initial run from the election. That bounce ran up to 1.0825, at which point sellers took back over and drove right back down for a test of the big figure. That type of rejection denotes continued bearish potential, particularly if we see next week’s inflation data come out strong to prod the USD-higher.
EUR/USD Four-Hour Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
EUR/USD Longer-Term
On a longer-term basis the range in EUR/USD still applies. Support from earlier in the year showed at a Fibonacci level plotted at 1.0611 and that’s on the radar for next support. That can be spanned up to another Fibonacci level at 1.0643 to create a zone of interest just below the current lows.
And below that, it was the 1.0500 level that sellers failed to run with last year, and that remains a longer-term item of note if we do see EUR/USD weakness and USD-strength extend through next week.
But it’s those upper wicks on the past two weekly bars that say a lot, as this was two different failures from bulls to run with a bounce, as they were quickly and aggressively offset by sellers driving prices to fresh lows. So, while the longer-term range still applies, the intermediate-term trend has been decisively bearish.
EUR/USD Weekly Price Chart
Chart prepared by James Stanley, EUR/USD on Tradingview
USD/CAD
For the past couple weeks, I’ve been tracking USD/CAD for USD-weakness scenarios. And while the USD is higher over the past week, USD/CAD is not. So – if we do see a reversal in the greenback, I still like USD/CAD for scenarios of US Dollar weakness. A large part of that reason is the longer-term look as the pair has continued to stall inside of the 1.4000 psychological level over the past four years.
USD/CAD Weekly Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/CAD Shorter-Term
Perhaps more interesting is how the pair reacted when we had legitimate shows of USD-weakness last week.
When DXY pulled back ahead of the election, eventually finding support at that 103.32-103.46 area, USD/CAD showed a strong sell-off until support played at a Fibonacci level plotted at 1.3822.
The Wednesday bounce in DXY that extended to a fresh high there merely matched the prior high in USD/CAD, setting up a possible double top formation (provided that high can hold). And then when USD-weakness appeared on Thursday, USD/CAD held a higher-low, at the zone around 1.3850.
Trading reversals or calling tops is notoriously difficult and challenging but this type of behavior, with the deduction noted above, is one of the driving facts that can make something like that more interesting. And if we do see the USD turn, the idea would be like the two episodes showing earlier this week, where USD/CAD turns a bit harder given the inclusion of some CAD-strength.
USD/CAD Daily
Chart prepared by James Stanley, USD/CAD on Tradingview
USD/CAD Shorter-Term: The Double Top
Double top formations are objective setups: They require an equal top with a neckline, which is simply the low between the two highs. But – if the high gets taken-out before the neckline does, the formation is invalidated, and this remains a possibility in USD/CAD.
But – if the neckline gets taken out, the formation triggers, and this opens the door to bearish breakout potential.
I think for this scenario to play out we’d need to see both dovish Fed-speak and weak inflation data on Wednesday. And while that would likely bring bounced to major pairs like EUR/USD and GBP/USD, USD/CAD could be better positioned given the longer-term backdrop, to take advantage of that USD-weakness.
USD/CAD Four-Hour Chart
Chart prepared by James Stanley, USD/CAD on Tradingview
--- written by James Stanley, Senior Strategist
