The USD trickled higher, running into the 110.25 level again which helped to hold last week’s high. EUR/USD, USD/CAD and USD/JPY Price Action Setups here, ahead of the FOMC on Wednesday.
The Euro remains in a dire position but that’s not really news at this point. The single currency has been punched continually by the US Dollar as witnessed by the bearish trend that’s been going for fifteen months at this point.
Perhaps more disconcertingly, even as the ECB shifted in to a much more-hawkish mode, EUR/USD has done little by way of response – merely oscillating around the same parity handle that’s been in-play for a couple of months now. And as I’ve warned multiple times, a level of that nature should take some time to breakdown. In 2002, when EUR/USD was on the way up as the Euro was gaining global acceptance, EUR/USD took about six months to leave parity behind.
For this most recent iteration – parity started to come back into play again in July and there’s been moderation in the sell-off, albeit slightly. There’s been a build of a falling wedge formation as bears have shown trepidation around parity. This keeps the door open for pullback potential, particularly if the Fed is able to maneuver a dovish presentation of an otherwise very-hawkish message.
Also of interest – while last week’s CPI slammed EUR/USD back-below the big figure, notice what happened after – as a build of support showed around the .9950 level. From the weekly chart, this amounts to a possible higher-low after a higher-high ahead of that CPI release.
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