- During the trading session on Thursday, we will have to pay close attention to this market, due to the fact that we saw an attempt to rally on Wednesday.
- A lot of this is probably due to the fact that interest rates rallied quite significantly during the session, widening the spread between these 2 currencies.
- Furthermore, we also have to pay close attention because we are getting close to extraordinarily low levels as the market is hanging around the 0.79 level.
Technical Analysis
The technical analysis for this market is obviously very negative, as we have been falling out of bed for some time now. That being said, the market is getting close to the bottom of the major selloff over the last couple of years, which is probably a little closer to the 0.78 level. In other words, we are getting stretched and to say that we are oversold in the USD at this point in time is simply stating the obvious. This isn’t to say that you should jump in and start buying, but it is starting to get more and more intriguing at this point, and I do believe that a bounce that the 0.81 level could very well happen. Anything above that level could change quite a bit the attitude in this market, but ultimately, I think you have to be very cautious and very patient to see that happen.
The candlestick itself for the trading session on Wednesday as a bit lackluster, but the previous session was a major hammer, and that does suggest that there is at least a bit of fight here. Keep in mind that the Thursday session will feature the Non-Farm Payroll announcement, which of course will cause a lot of noisy behavior in the US dollar overall, and I think that will be any different here. However, the Swiss franc has been extraordinarily strong, while the US dollar has been extraordinarily week. While I am looking for a turnaround from a longer-term standpoint, we do not have that signaled quite yet.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.