The US dollar went sideways initially during the day on Friday, showing resistance near the 114.50 level, which is an area I have been talking about for some time. That is the beginning of significant resistance towards the 115 handle above, and is not until we break above the 115 handle that the longer-term buyers will come in and hold on to the position. This exhaustion that we have seen in turn around for me is something been a very interested in, because it gives me an opportunity to pick up the pair at lower levels. I would like to buy this market, perhaps closer to the 113.50 level, maybe even the 113 handle, and most certainly at the 112 level. I think it’s only a matter of time before we find buyers coming back into the market place, as the Federal Reserve looks very likely to raise interest rates. However, this pair is somewhat wrist sensitive, and perhaps stock market pullbacks could be a bit of a weight on the pair. For me, I prefer to wait for a buying opportunity instead of trying to short this market, and less we break down below the 112 handle on a daily close. At that point, I think the market probably goes down to the bottom of the overall consolidation at the 108 level.
Overall, I think the Federal Reserve will continue to look hawkish, and especially in comparison to the Bank of Japan. Longer-term, the interest rates raising in the 10 year note market in America of course will continue to put bullish pressure to the upside. If we can break above the 115 handle, the market should then go looking towards the 118 level above. Overall, this is a market that will be choppy, and perhaps offer value if you are patient enough.
Written by FX Empire