Dollar moves lower as Fed hedges inflation bet

Technical Analysis

Author: Greg Michalowski | usdjpy

USDJPY trades to new session lows

The Fed minutes see a near term hike but there definitely is more hedging about the potential for inflation (and more hikes). Those feelings are congruent with comments made last night by Fed Chair Yellen.

That has the dollar looking a bit weaker.

The USDJPY has moved to new session lows and further away from the broken 200 and 100 day MAs at 111.68-72. The pair traded at the lowest level since September 20. The low reached 111.392 so far. The 50% of the move up from the September low comes in at 111.02, and that is the next key target for the sellers to get to and through.  

The 100 and 200 day MA remains a hard stops (i.e. risk) for shorts now.   The price has not traded back above those MA level since breaking earlier in the day.  The bias is bearish below those lines.  We can expect more selling as a result. 

The EURUSD is trading above the 1.1800 level now and is moving above the 61.8% of the move down from the November high at 1.18036. It is also moving above highs from Monday and Friday at 1.1805-07. The high just reached 1.18095. Traders will now like to see the 1.1800 level hold. The high from Nov 17 reached 1.18214.  That level is also the 50% of the move down from the September high (see daily chart below). A move above that level will next look toward the high from last week at 1.1860.  

In other pairs, the GBPUSD is trading above topside trend line at 1.3300 (now close risk for longs) and looks toward the swing highs at 1.3320 and 1.3337 (the 1.3340 is the 50% of the move down from the September high too). 

The USDCHF is also trading at a new extreme low and looks toward the 200 day MA at 0.9806. The 38.2% comes in at 0.98017. A break below that level is more bearish for that pair. 

Later toward the end of the day, retail sales in New Zealand will be released. The NZDUSD has moved to new week highs and in the process moved above a trend line going back to September (at 0.6857 - now risk for longs).  The 100 bar MA on the 4-hour chart comes in at 0.6885.