Forex Trading Insights: Dollar Rally Extends as ISM Services PMI Beats Forecasts
Forex Trading Insights: Dollar Rally Extends as ISM Services PMI Beats Forecasts
Forex Trading Pro Matt highlights a significant day for the dollar, with its continued rally following the release of January's ISM services PMI data, surpassing consensus expectations. The dollar's ascent, marked by exceeding a critical resistance level and moving into a consolidation phase around the 1.0425 mark, suggests potential for further upward momentum. Matt also notes the dollar achieving new highs not seen earlier in the year or the latter part of the previous year, indicating a bullish trend. The analysis extends to specific currency pairs, including the UC idea and UJ, where similar patterns of breaking past resistance and consolidation are observed, setting the stage for anticipated gains. This comprehensive review encapsulates the dollar's performance and its implications on forex trading strategies, underscoring the importance of technical analysis in forecasting market movements.
Outline
I. Introduction
Dollar strength and dollar-led currency pairs
ISM services news kickstarts the week
II. ISM Services PMI Report Boosts Dollar
ISM services PMI numbers for January beat expectations
Reading came in at 53.4 vs 52 consensus
Fuels further dollar rally from last week
III. Technical Analysis of Major Dollar Pairs
DXY Dollar Index
Breaks above 104.25 resistance
Consolidating below 104.50 minor quarter level
Watching for breakout above this for continuation higher
EUR/USD
Cleared past resistance, closed above 135.25 level
Consolidating below 135.25 minor quarter
Preparing for next leg higher above 135 major quarter
USD/JPY
Continuing last week's uptrend after consolidation
Price exploring between new weekly highs/lows
Watching for break above 148.50 minor wildcard level
IV. Trade Opportunities & Outlook
Strong USD trend favors further upside in DXY, EUR/USD, USD/JPY
Consolidation patterns suggest continuation after breakouts
No major news ahead, technicals in focus for direction
Monitor consolidation and expect upward explosion
V. Conclusion
Dollar strength continues from ISM Services PMI surprise
Forex trades to watch this week based on technical analysis
Transcript
Good evening. So today was actually a very interesting day for the dollar and for our dollar lead pairs as this week kicked off with the ISM news. So with the ISM news, what ended up happening for the services news is that the dollar ended up continuing its run that it had towards the end of last week. And with the run that it had, it continued today. As not only did ISM services PMI numbers for the month of January increase, but they increased above the consensus expectation.
So the consensus expectation was 52, but the report was 53.4. And so with that, that's why we got this nice size pop here with the dollar. And again, if you see here, this yellow line right here is going to be where the week actually opened. And so we started off here at one, 3962. And so we made it up here past the resistance that we saw earlier as far as price being able to make it up here. So we made it past that. And so now what's happening is this consolidation. So the area that we called out was 100 and 425 holding.
Because if 1425 continues to hold, then this has continued move that it can make upward. Should it pull back to that quarter area or if it consolidates right underneath this minor quarter level of 104, 500, it will still make that continued move upward after consolidating around this range. So that is one of the nice things that has taken place for the dollar at this time. Again, the dollar right now is pushing highs that it hasn't seen yet this year and it didn't even see these highs toward the end of last year. So with that, we are pushing highs that the dollar has not seen. So we will continue to watch this one as this trade continues to unfold.
We also saw for the UC idea, this one did again make it above this area of past resistance. And so after making it through that area of resistance, it closed above for one of our four hour candles and then pulled back to this minor quarter level here of that 135, 250. And so now it is consolidating in the same way that the dollar index is consolidating right underneath the minor quarter. This one is doing the exact same, getting ready and preparing for price to continue to take off as it is above this major quarter level of 135.
And for the UJ idea, again, that same continuation off of last week, nice consolidation. So right now this one is price is spreading. So it's making new lows for the week, but also making new highs for the week as well.
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