Talking Points

• US dollar managed to hold important support levels against the Euro, British pound and Australian dollar.
• EURUSD heading back towards the 1.2350 support area where bulls might take a stand to protect more downside in the pair.
• GBPUSD looks set to invalidate a bullish pin bar formed on the daily timeframe and might continue trading lower.

Technical Analysis

The best US dollar pair to follow currently is USDJPY. The pair recently made new highs and looks set for more gains moving ahead. There is a solid support forming around the 114.50-20 area, which might act as a barrier for the US dollar buyers. On the upside, an upside acceleration towards the 116.00 level is possible as long the pair maintains momentum. Another pair which one might consider buying is USDCHF. The pair recently fell closer to an important support area around the 200 simple moving average which ignited a rally in USDCHF. There is a critical point to note from the hourly chart i.e. the fact that 100 MA is moving along with price and acting as a short-term support. There is a bullish trend line on the 4 hour chart which might act as a catalyst for the pair moving ahead. The 4 hour RSI is well above the 50 mark which supports more gains in the USDCHF pair.

Fundamentals

There was no major release lined up during the last couple of sessions, which mostly acted as a support for the US dollar. Moreover, there are a few low-risk events lined up in the coming sessions, including the US NFIB Business optimism index and wholesale inventories data. The US NFIB Business optimism index will be released by the National Federation of Independent Business. The forecast is of a minor decline in October 2014 from the last reading of 95.3 to 95.1.

There are very less chances that the release would impact the US dollar in the short term. We might mostly witness ranging moves in pairs such as EURUSD, GBPUSD and AUDUSD. Moving ahead, there is an important fundamental release scheduled in the New Zealand, as the RBNZ will publish Financial Stability Report. This is not all as the RBNZ Governor Wheeler speech is also lined up five minutes after the release.

We might witness a lot of action in the New Zealand dollar, as the central bank recently stated that more downside in NZDUSD would support the economy in the near term. The NZDUSD pair is trading lower ahead of the release, and we need to see how sellers react to the upcoming release. In Japan, the Tertiary Industry Index will be released by the Ministry of Economy, Trade and Industry. The forecast is slated for an increase of 0.9% in September 2014, compared with the last month’s decline of 0.1%. The yen pairs are trading higher Intraday, and with this release there is a hope of a correction in the short term.

Trade Idea

Buying USDCHF around the highlighted trend line is a good option as long as the pair holds it.

About Author

Usman Ahmed is a Sub-Editor at http://www.forexbonus.co.uk which is one of the most widely used forex sites on the web. Forex Bonus offers trading news and reviews about forex brokers.