- US Dollar falters at key support, further downside possible in the days ahead
- Big week for forex markets points to larger currency moves
- We remain in favor of our trend-following Momentum2 trading strategy
The US Dollar may continue lower versus the Euro and other key counterparts as traders brace for a big week in forex markets.
It remains critical to watch the Dollar’s reaction near key support versus the Japanese Yen and a major confluence of volume/price-based floors in the Euro—particularly as we see volatility prices/expectations rise considerably in the week ahead. Traders are betting on/hedging against larger FX market moves ahead of important economic event risk, and the coming days could set the tone for US Dollar price action through the foreseeable future.
Forex Volatility Prices Rise on Key Week in Financial Markets
Data source: Bloomberg, DailyFX Calculations
Our overall trading strategy will be to remain nimble and likely position for a larger US Dollar breakdown. Uncertainty surrounding US GDP Growth figures, a highly-anticipated US Federal Reserve monetary policy decision, and end-of-week US Nonfarm Payrolls employment data tells us that a USD breakdown is far from a guarantee.
And yet the potential for trend change leaves us in favor of our Momentum2 trading strategy. Past performance is not indicative of future results, but this trading system has often done well in times of sustained trend reversals.
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