Forex Trading Signals: EURUSD and USDX July-August 2017

After President Draghi’s hawkish speech in late June, Forex investors turned bullish on the Euro. Draghi said no further Euro rate cuts would be needed, signaling a possible shift in the ECB’s monetary policy. As a result, the Euro gained strongly against major currencies (USD, CHF, JPY, and GBP). However, EURUSD has now entered an accumulation phase expected to last until early August 2017.

■ Market: Foreign Exchange

■ Assets: EURUSD | USD-X

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Macroeconomic Outlook

In June, the Fed raised the federal funds target rate to a range of 1.00% to 1.25%, marking the third consecutive quarterly increase. This is the highest US funds rate since the 2008 financial crisis. The move reflects record US job growth and the lowest unemployment rate in 16 years. The Fed also announced plans to reduce its large bond portfolio. After three rounds of quantitative easing, the Fed holds $4.5 trillion in bonds (including $1.8 trillion in mortgage securities). Meanwhile, EURUSD rose as President Draghi signaled a monetary policy change and the possibility of a stronger Euro.

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US Dollar Index (USDX) Technical Analysis

This is the weekly chart of the US Dollar Index (Futures Contract). As shown, the USDX trend is bearish. The key support area for USDX is not nearby. Currently, USDX trades at 95.48, with the support zone starting at 90.80 (S1) and extending to 86.90 (S2). Note that S2 is based on the A2 trend line, which provides general support. On the resistance side, strong supply is expected at 100.5 (R1), and especially at 104.80–105.00 (R2). The R2 point is based on the A1 trend line, which offers general resistance.

Chart: US Dollar Index (Futures Contract -Weekly)

US Dollar Index (USD-X) Support and Resistance Levels

• USDX currently trades at 95.48

These are some key support and resistance levels for the USDX.

□ Demand (Support) Level: 90.90-90.80 (S1) | 89.50 | 88.30 | 87.30-86.90 (S2)

□ Supply (Resistance) Level: 98.50-98.70 | 99.70 | 100.5 (R1) | 104.80-105.00 (R2)

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EURUSD Chart and Technical Analysis

The EURUSD trend is currently bullish.

• EURUSD currently trades at 1.1385.

Chart: EURUSD (H4)

These are some key support and resistance levels for EURUSD:

□ Demand (Support) Level: 1.1280-1.1290 | 1.1240 | 1.1115-1.1125 | 1.0955-1.0975 | 1.082-1.0840 | 1.0730-1.0735

□ Supply (Resistance) Level: 1.1550 | 1.1600-1.1610 | 1.17050 | 1.1825-1.1830 | 1.2005-1.2010

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TradingCenter Indicator (TCI) on EURUSD

After a strong move in recent weeks, TCI shows that EURUSD has entered an accumulation phase. According to TCI, this phase will likely end in eleven (11) trading days (TCI = +0.75%), which means late July or early August. Here are the full TCI readings for EURUSD.

Click the slider below to see the complete TCI readings for EURUSD.

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EURUSD Statistics

These are the statistics for EURUSD based on 13.5 years of research by TradingCenter.

MONTH	AVERAGE CHANGE	TIMES (↑↓)	AVERAGE EURUSD VOLATILITY
JULY	0.10%	6↑ 8↓	0.815%
AUGUST	-0.34%	8↑ 6↓	0.809%
SEPTEMBER	0.80%	7↑ 6↓	0.908%

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■ Forex Trading Signals: USDX July-August 2017

George Protonotarios, Financial Analyst, George at LinkedIn

TradingCenter, July 13th, 2017