This morning the US Dollar Index (DXY) has dropped to this week’s low of 90.50. The DXY is set to head down lower to the low created last week at 90.42. As a result, pairs such as EURUSD and AUDUSD are ready to breakout.
Price action analysis presents EURUSD as almost ready to breach 1.21750 and head higher. The first target in mind is 1.22500 which was the previous monthly support. Smart money analysis has traders already long with the first target of 1.21700. Both trading principles envision a bullish Euro in the short-term.
As for NZDUSD traders have a mixed bias for the pair. Swing traders are waiting for the price to breakout above 0.71200 to take longs to previous monthly highs. Intraday institutional trading is entering shorts with the bottom of the daily range as a target. Both setups are valid depending on the type of trading style you personally match with.
Tomorrow the European Union will release its PMI manufacturing data, events that will surely move the market. Traders should reduce risk during that time period. This may be the last day of the trading year with such volatility so it may be a blessing in disguise.
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- Read yesterday’s breakdown: DXY Ranging + Pending Breakouts for EURUSD & NZDUSD
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