Today I’m going to show you exactly how I’m trading the DXY, EURUSD, GBPUSD, AUDUSD, and USDCHF next week.
The DXY will start next week at a critical level, and pairs like AUDUSD and USDCHF could offer an opportunity early in the week.
Watch the video and scroll down for the annotated charts and analysis.
The US Dollar Index (DXY) suffered a significant pullback following Tuesday’s CPI and Wednesday’s Fed rate decision.
It was a more aggressive pullback than I anticipated, but dollar bulls still have a chance next week.
The 102.20 area is the last chance for the dollar index to make a higher low this year.
If that area fails and the DXY heads back to 100.80, we’ll have a series of equal lows and lower highs that’ll look relatively bearish.
But for now, the DXY is above 102.20, and the 2021 trend line I explain in today’s video.
That level is near 102.00 this week, so watch for dollar strength around that area.
Key resistance comes in at 103.00.
EURUSD had an impressive rally last week and even took out the 1.0930 level.
However, euro bulls face a significant test at 1.0970 this week, and the 1.0930 area is still resistance on a monthly closing basis.
We’ll see if the EURUSD can continue this rally, but considering where the pair ended last week, I’d expect a pullback first.
We also have a 2022 trend line that might become a factor this week at 1.0970.
Key support on a break below 1.0930 is the 1.0830 area.
GBPUSD broke above a significant confluence of resistance at 1.2740 on Thursday.
The pair continued the rally on Friday, but the pound faces a few high-impact events next week, including Wednesday’s CPI and Thursday’s BOE rate decision.
A pullback to 1.2740 seems likely, given the extent of last week’s rally.
So we’ll see if this GBPUSD breakout holds and the pair can test 1.3000 resistance or if 1.2740 support fails next week.
Either way, we could have an opportunity to trade GBPUSD.
But be careful with the volatility from next week’s events.
AUDUSD closed last week above the 0.6870 handle, which was a pivot between December and February.
For now, the pair is holding above the level, but a daily close below would signal a pullback to 0.6790.
That was former range resistance, so it should now serve as support.
Alternatively, if AUDUSD starts where it left off last week with a hold above 0.6870, the 0.6985 level could be next.
USDCHF is one reason we might see some USD strength in the coming days.
However, we need to see a reclaim of the descending channel at 0.8960 first.
The USDCHF fell below the level on Thursday and couldn’t reclaim it on Friday.
A higher time frame close above 0.8960 would make things look more bullish, while a daily close below the November trend line at 0.8890 would be bearish.