As we approach the middle of the holidays, the US Dollar Index (DXY) is still respecting the long-term downtrend. This morning traders are finding many of the majors selling off, but that may not last for too long.
Price action and smart money analysis both agree upon a bearish bias for the Dollar. Price action believes that the Dollar will continue to range between 90.00 and 91.00 until next week. Once 90.00 is broken on the smaller timeframes, price should make its way down to December’s low and then to the long-term target of 88.75.
Since future losses are forecasted for the Dollar, traders can be hopeful of entering long once again for the majors. Many of the majors will first need to clear their respective December highs before a long can be entered. Out of all the major currency pairs, EURUSD, GBPUSD, AUDUSD, and NZDUSD are showing the most promise to the upside. If these pairs instead start to create new lower lows, traders could explore possible shorts.
Similar to last week, traders will be faced with a shortened trading week due to New Year’s Eve and New Year’s later in the week. It is still recommended that traders do not trade during this time and take a much-needed break from trading. Things will start to return to normal starting next week. Until then, enjoy the time off.