US DOLLAR BOUNCE FROM FIBONACCI SUPPORT

The US Dollar is bouncing from a key area of Fibonacci support to open this week, and this takes place after a rough outing last week for USD bulls. After the Greenback filled last weekend’s gap, finding resistance at the prior close on three separate occasions, sellers took over to push prices down to 96.40. But, similar to what was seen last week, bearish pressure slowed, and prices began to bounce using the 96.47 Fibonacci level for an assist. The big question as we open this week is whether buyers can continue to push, or whether a larger wave of weakness is on the horizon.

US DOLLAR TWO-HOUR PRICE CHART: RESISTANCE AT LAST WEEK’S GAP, SUPPORT AT 96.47 FIBONACCI LEVEL

Chart prepared by James Stanley

On a bigger-picture basis, there is a potential for a deeper sell-off or pullback after the US Dollar’s begun to trade below the bullish channel that’s been going since September. Strength showed in the currency after the September rate hike at the FOMC and lasted until we traded into December. Price action posed an initial test below this channel last week, but buyers soon reacted to the 96.47 Fibonacci level to push prices back-up to fill last week’s opening gap. But now that sellers have pushed back below this area, the big question is whether the support coming from that Fibonacci level can last for much longer. A bit deeper is additional support potential around 95.86-96.04.

US DOLLAR FOUR-HOUR PRICE CHART

Chart prepared by James Stanley

THIS WEEK’S ECONOMIC CALENDAR

On this week’s economic calendar are two items of note out of the US, and that’s the Wednesday release of CPI data for November followed by Advance Retail Sales set to be released on Friday. Outside of the States, Europe is in focus in the latter-portion of the week as the ECB rate decision is on Thursday and Mario Draghi has a speech in Pisa, Italy on Friday.

DAILYFX ECONOMIC CALENDAR: HIGH-IMPACT EVENTS FOR THE WEEK OF DECEMBER 10, 2018

Chart prepared by James Stanley

EURO ATTEMPTS TO BREAK CONGESTION AHEAD OF ECB

In-front of that ECB meeting later this week, the Euro is attempting to string together gains to break out of a recent range of congestion. On the Daily chart below, that congestion becomes visible as EUR/USD has spent much of the past month trading into a symmetrical wedge pattern, with the past two trading days seeing bulls tip-toe above resistance.

EUR/USD DAILY PRICE CHART

Chart prepared by James Stanley

Going down to a shorter-term chart will show this bullish attempt a bit more clearly, as buyers have pushed up to a fresh two-week-high to start this week, and prices are now pulling back to find a bit of short-term support around prior resistance.

EUR/USD FOUR-HOUR PRICE CHART

Chart prepared by James Stanley

GBP/USD: POUND BREAKS DOWN ON BREXIT VOTE CANCELLATION

Another week, another twist in the Brexit saga, and it now looks like the vote for the House of Commons will be delayed. This is not being taken lightly by GBP traders as Cable is now trading down to fresh 18-month lows to open the week, and this is likely playing a part in that support bounce showing in USD to kick off this week’s trade. The big question here is how far bears might push? Could this possibly bring the 1.2500 psychological level into play? Below that level would be one more area of interest, and that’s the 14.4% Fibonacci retracement of the Brexit move at 1.2390, a level that was last in play in April of 2017.

Given the early nature of this move, traders would likely want to remain cautious of chasing the move to start the week.

GBP/USD WEEKLY PRICE CHART

Chart prepared by James Stanley