So far, USD is on track for a positive close in November, a month which has historically been favorable to bulls. Yet nothing moves in a straight line, and it appears bears could now have their say.
DXY: A bearish outside day has formed, and price action appears poised to retest the support zone around 97.86-98.00. Given the strength of bullish momentum from the 97 support one, the bias is for a minor pullback and for DXY to head towards 98.64 resistance.
However, as previously noted, whilst November is typically a bullish month for the dollar, December is typically bearish. As seasonality is merely a tendency, their timing is not perfect, which leaves the potential for the patterns to shift forward or backward in time. So, whilst price action on DXY (US dollar index) shows potential for correction against its recent gains over the near-term, we should also consider the potential for December’s weak dollar tendency to creep into late November.
As we head into next week, a few currencies could now benefit from a weaker dollar over the near-term.
EUR/USD: A bullish outside bar has formed ~1.1000, and its failed, intraday attempt to break this key level adds further weight to the support level. Given it has fallen -1.6% over the past seven sessions, it appears ripe for a correction which paints a bullish bias over the near-term.
USD/JPY: The potential for a bearish wedge remains very much alive and well. After two failed attempts to break 109.31 over two consecutive days, prices rolled over and left a 2-ber reversal at the highs. Price action closed beneath the lower trendline of the wedge formation, so it possible we have seen the high at 109.48. However, rarely do such patterns play nicely with the ‘textbook perfect’ trendline, so be prepared for some noise around current levels.
Related analysis:USD/CAD Retraces Most of Its Move Since Mid-October
Further Signs That The Dollar Could Be In For A Better Month
A ’Risk Reversal’ Could Finally Be Underway | JPY Pairs
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