USD Stalls At Familiar Hurdle

Talking Points

• USD/JPY inching towards key pivot
• S&P 500 meandering around 50-day MA
• US DOLLAR testing key retracement again

Foreign Exchange Price & Time at a Glance:

ChartPrepared by Kristian Kerr

• USD/JPYcontinues to consolidate below the 124.70 78.6% retracement of the June/July range
• Our near-term trend bias remains higher in the exchange rate while above 123.00
• A daily close above 124.70 is needed to set off a more important move higher
• A minor turn window is eyed early next week
• A close below 123.00 would turn us negative again on USD/JPY

USD/JPY Strategy: Like the long side while above 123.00

ChartPrepared by Kristian Kerr

• S&P 500 continues to meander around the 50-day moving average
• Our near-term trend bias is positive while above 2060
• Traction over 2115 is needed to re-instill upside momentum into the index
• Minor turn windows are seen today and Friday
• A daily below 2060 would turn us negative on the S&P 500

S&P 500 Strategy: Like the long side while over 2060

Focus Chart of the Day

Range trading remains the name of the game in the FXCM USDOLLAR Index (equally weighted basket of USD versus EUR, JPY, AUD, GBP) ahead of the widely anticipated US employment figures on Friday. However, a false head & shoulders pattern break to the downside last Friday keeps the index in a positive near-term technical position heading into the data. The index has failed several times over the past few weeks to close above the 78.6% retracement of the April/May range around 12,050 and this remains a clear hurdle to a more important run higher in the buck. If we do ever get that elusive daily close above 12,050 we would expect a re-test of the April highs in relative short order. Any weakness below last week’s low around 11,965 would warn that USD is rolling over and signal a deeper correction is about to unfold.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com