Article originally published on innerfx.com and republished here with permission
Quote of the day: “It is not enough to have a good mind. The main thing is to use it well.” ~ Rene Descartes
Good morning. Dollar is losing ground after S&P downgraded the U.S. credit rating to AA+, but managed to fill the opening gap against the EUR, which is currently trading into mid 1.43, finding support at 1.4300 a bit earlier. All eyes are on equity indices around the world as there are fears that the stock markets will continue to fall in the next days – and that would benefit the dollar. Let’s take a look at some charts – I’m quite sure there are many setups worth our attention these days, but think twice before jumping into anything because the markets are – and will most likely remain turbulent as uncertainty rules supreme.
US Dollar Index – you probably know that I’ve been monitoring this resistance zone around 75 for several days, first expecting it to act as a decent sell zone but to be frank, last week’s breakout into the triangle’s range made me believe that the recovery will continue towards the flat top between 76 and 75.50. Next days should provide further clues whether downtrend resumes or not.
EURUSD – still trading into the 500-600 points range since May, so far not being able to break outside the range because bad news keep coming from both US and Euro zone, therefore in order to exit the range – a powerful catalyst to support one of the two currencies is needed. Yes, I know it sounds a bit ironic but it’s the bad news that is keeping this currency pair stable. Although I’d prefer to look for trading opportunities in other instruments right not, selling at the top – around 1.45, is tempting. We’ll see if we get there
GBPUSD – cable is performing quite well against the buck, it filled the opening gap – like other pairs, and is currently testing the consolidation upper limit near 1.65. Buying a small size on the potential break higher is a plan I’m currently considering.
Have a great day