The euro bounce continues, but buyers face a significant test in the 1.1800 region. Meanwhile, the DXY price action suggests more EURUSD relief ahead.
See exactly how I’m trading EURUSD and DXY in today’s video. Get the key support and resistance levels, single prints (imbalances), and tradeable scenarios.
EURUSD is fast approaching a critical test at 1.1800. In the last Weekly Forex Forecast, I discussed the significance of the 1.1645 support level, along with 1.1722 and 1.1780.
The levels at 1.1722 and 1.1780 aren’t visible without the help of TPO. Time Price Opportunity is a market profile indicator. The one below is available on the TradingView premium plan and higher.
Those levels are referred to as single prints in TPO terms, also known as imbalances.
The selloff from September 24 to 25 was so aggressive that it left these imbalances in its wake. Market makers often target these regions, and this week’s EURUSD price action is no exception.
However, there are a few key factors to consider when trading the euro.
First, I’m not convinced market makers tagged the 1.1780 imbalance on Wednesday. The EURUSD came close to it, but didn’t quite reach the level.
Of course, even an indicator as good as TradingView’s TPO is only a reference. The level may be a few pips lower than 1.1780.
But the more influential factor is what’s happening to the USD index (DXY).
Last week, the DXY closed above 97.70 after testing the 98.60 resistance level. That flipped 97.70 back to support.
We saw the DXY bounce there briefly on Tuesday. Yet, as noted in yesterday’s GBPUSD video, the DXY closed below a 4-hour trend line, suggesting continued weakness.
That’s precisely what we’re seeing on Wednesday with the USD once again trading below 97.70.
With US non-farm payroll numbers this Friday, where the DXY closes this week will be key.
A close below would suggest weakness and a new range between 97.70 and 96.80. A close above 97.70 would keep the pressure on 98.60.
However, even a daily close below 97.70 on Wednesday would open up the 97.27 single print on the DXY.
Bottom line: EURUSD is approaching a confluence of resistance at 1.1780-1.1800, but the DXY is suggesting (at this time) that the euro has more upside potential.
