After a series of central bank meetings, the foreign exchange market entered a phase of strong consolidation.
This consolidation is clearly visible by the damping fluctuations in the US dollar index – USDX.
For a short period of time, we observed a meeting of the ECB with monetary easing, the Fed rate cut, meetings of the Central Bank of Japan, the Central Bank of England, and the Central Bank of Switzerland. Essentially all the world’s largest central banks. It is not surprising that after such an injection of new information into the market, the foreign exchange market took a break.
On the four-hour chart of the US dollar index (above), this strong consolidation is clearly visible. Apparently the next week can be very volatile. The stronger the consolidation, the stronger the way out of it.
The US dollar continues to be in an uptrend. Consolidation occurs within the last impulse, which established a new maximum. This is a range of 97.140 (support) – 98.930 (resistance). On the graph of the dollar index, they are highlighted in light green and bold red horizontal lines. Accordingly, it is more likely to expect continued growth of the US dollar, or at least one more test of the last maximum.
Let’s see the situation on the anti-dollar – the EURUSD currency pair.
On the daily chart, the EURUSD pair continues to be in a declining trend within the channel. And we also see consolidation on the pair. The last four daily candles are inside bars. This area on the graph is highlighted with a pink oval.
And as usual, when forming the inside bar, we have the figure of a technical triangle.
On the hourly chart, using the Day Bar Info indicator, I highlighted the daily bars forming a triangle. In fact, the last trading week passed within the range of the pair’s fluctuations after the ECB meeting.
It is pointless to guess which way the exit from consolidation will be. It is necessary to carefully monitor the actions of traders near the edges of the triangle and technical levels. But do not forget, the euro is in a falling long-term trend, the US dollar is growing.
Whether we will see a trend change or its continuation, we will find out next week.
Be prudent, observe risk management and trade in a plus.