Dollar’s Breakout Effort Falls Apart and Elections Volatility is Underpriced

Talking Points:

  • A break above 97 for the DXY and below 1.1300 for EURUSD were soundly rejected this past week
  • False break reversal potential rises, but volatility may interfere with traders’ plans for trends
  • See how retail FX traders are positioning in Dollar-based majors like EURUSD on the sentiment page

Technical Forecast for US Dollar: Neutral

The Dollar was on the verge of a critical bullish breakout this past week, but the effort fell apart just after the technical trigger was pulled. That shouldn’t come as a surprise as we have discussed the disparity between market conditions and technical stance for some weeks now. There are a host of remarkable technical levels for the various Dollar aggregates and key pairs like EURUSD, GBPUSD and USDJPY; but the presence of these milestones doesn’t alter the intent and convictions of FX traders. A break can pull in some short-term technical interest to fulfill a quick charge on momentum. However, there is limited confidence to facilitate the development of any serious trends. And, with the DXY Dollar Index attempting to push highs not seen in 16 months, a greater degree of confidence in follow through

Article source: https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2018/11/02/Dollars-Breakout-Effort-Falls-Apart-and-Elections-Volatility-is-Underpriced.html