Asian Session Morning: Using the USDX Chart Alongside EUR/USD

German Concessions:
We spoke about it last week, but it seems as though markets have come to the conclusion that Greece exiting the euro is actually EUR/USD positive. Yes, I know it sounds crazy, but think about it for a second.

Let’s face it, the European decision making process is driven by an export dominated Germany, who are currently not enjoying the relief rally that EUR/USD has experienced over the last 6 months as the euro has bounced off its bottom. If Greece goes, a huge weight is actually lifted from the euro.

This all powerful German export voice who enjoys the fruits that a weak euro bears will not allow Greece to exit the Eurozone. It just isn’t going to happen.

As we saw yesterday, (cliche alert) the can was again kicked down the road. Increasing taxes that the nation already has trouble collecting and increasing pension allocations are as good as lip service. Greece doesn’t have to budge and they know it.

It will be Germany making the concessions to keep them in the euro, not Greece.

Fed’s Powell Speaks:
Yesterday’s big push lower across the majors was actually USD driven, after the Fed’s Jerome Powell said there was a 50% chance of a rate hike in September. Something that markets were definitely not pricing in after the perceived dovish vibes that have been pulsing from the Federal Reserve.

EUR/USD Daily:

Click on chart to see a larger view.

This daily resistance level has held firm, and this was the catalyst that price needed to finally kick down out of it. Price has now also tucked back inside the long term bearish trend line.

EUR/USD 4 Hourly:

Click on chart to see a larger view.

The 4 hour chart shows the move nicely, with short term flag support now in play around 170 pips lower again.

I take a look at using USDX chart levels in comparison with the majors in the chart of the day section below.

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On the Calendar Today:
Today’s calendar is again not massively market moving, but with Eurogroup Meetings come the headlines. Stay on your toes and once again don’t let them influence your positions. You are more than likely to get whipsawed out!

Wednesday:
JPY Monetary Policy Meeting Minutes

EUR German Ifo Business Climate
EUR Eurogroup Meetings

USD Final GDP
USD Crude Oil Inventories

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Chart of the Day:
With moves in the US dollar index going hand in hand with moves across the majors, I can’t stress enough how important it is to have one of these charts up on your watch list at all times.

USDX Daily:

Click on chart to see a larger view.

In these blogs and across Twitter (NYSE:TWTR), we’ve been watching how price is reacting to trend line support on the daily USDX chart. After a reportedly ‘dovish’ FOMC meeting last month, price couldn’t break through support and my play was always ‘so long as support holds, I’m bullish USD.”

As you can see, price broke through on a gap down, but there was zero follow through, even with a slew of Greek headlines. The fact that EUR/USD and GBP/USD each were sitting inside juicy resistance zones and had a long way to go before breaking out backed up the USDX view that this was nothing but a fake out, and it was worth holding short positions across the majors.

The power of the USDX chart as a reference is shown once again.