Bullish talk takes Dollar up to 76.00
Talk is cheap but in this case, all the bullish talk about the U.S. Dollar has formed a neat term support level at the 75.00 psychological level. Be cautious buying into talk unless price supports it.
Nothing has significantly changed between last week and today yet the dollar is poised to test 76.00 today – albeit in lower volume.
Every bounce in the dollar has been sold on strength and there’s little reason to think this bounce is an exception even with the talk of central bank intervention.
Fed Fund futures are still factoring a better than 60% chance of a December rate cut and the last week’s sell off in the stock market certainly stirred up more talk of rate cuts. Currently the Dow Jones has found buyers just above the key 13,000 level.
However, we must be ready if the 75.00 level does prove to be a bottom from which longer term support will be built upon.
Keep an eye on the 77.50 to 78.00 area as this is where a shift from weakness to strength will be made on the daily chart. Anything below the 77.50-78.00 level can be considered a correction and not a reversal.
Playing this bounce can allow USD/CHF, EUR/USD, and GBP/USD traders to play corrections.
The 76.00 level on the U.S. Dollar Index is primed for selling pressure and again, until there is a change in the dovish talk from Fed the selling pressure will return.
The upside target for the EUR/USD is 1.4700 if the 76.00 level proves to be too much for the dollar.
The USD/CHF set up could benefit from further strength or 76.00 dollar resistance. The downtrend line resistance will be the decision level from an entry.
