USD Bears Hit Back: US Dollar Drops from Resistance at Prior Support

US Dollar weakness has shown quite visibly thus far on the fresh week, with the US Dollar dropping from the 95.00 area of resistance that had come into play around the Friday close. This level of 95.00 was the swing-high for the Month of May, after which this became a key area of support for the US Dollar as the currency gyrated throughout this summer. More recently, as USD-breakdown themes have become more pronounced after the August mid-point, prices have broken-below and are now finding resistance at prior support, keeping the door open for a deeper breakdown in USD.

- Both GBP/USD and EUR/USD are gaining as the Dollar is dropping, but noticeably weaker than USD over the past week has been the Japanese Yen. A Bank of Japan interest rate decision highlights this week’s economic calendar, and the prospect of additional Yen-weakness can keep the bid supported in pairs like EUR/JPY and GBP/JPY. Around the British Pound – we’ll likely continue to see Brexit headlines driving the flow, but we also have a CPI print on the calendar for this Wednesday, and this will likely bring impact to near-term price action.

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US DOLLAR DROPS FROM RESISTANCE AT PRIOR SUPPORT

The Dollar is on the move already on the fresh week. Last week closed with a rather strong Friday showing for the US Dollar, as the currency bounced-up from a fresh monthly low to find resistance at the 95.00 level. But – that resistance held as we closed last week and opened this week, with bears taking over shortly after this week’s open.

This 95.00 level has been a big barrier on the USD chart over the past four months, coming in as the swing-high in the month of May and then functioning as varying forms of support for the bulk of the summer. More recently this price had started to come back as support in late-August; but this was unable to stem the declines and at this point, we have a case of resistance showing at prior support. This was the second zone of resistance potential we looked at last week for bearish USD-themes, and the reaction here opens the door for fresh lows and a deeper drop in DXY prices.

US DOLLAR HOURLY PRICE CHART: DROP FROM 95.00 RESISTANCE, PRIOR SUPPORT

A QUIETER CALENDAR ALLOWS FOR TRENDS TO AVAIL THEMSELVES

This week’s economic calendar calms a bit from the prior two weeks: We do have rate decisions out of Japan and Switzerland, along with a couple of key data releases with inflation prints from both the UK and Canada. But – noticeably missing are any high-impact items out of the US, and this would provide ample opportunity for prevailing trends to avail themselves as we remove the potential for noise as brought upon by US data releases. Particularly interesting for this week is the Yen around the Bank of Japan rate decision on the schedule for tomorrow night. A return of Yen-weakness was one of the biggest takeaways from last week, and that theme will likely remain in center-stage as we move deeper into this week.