US DOLLAR PRICE OUTLOOK: USD/CAD, GBP/USD, NZD/USD & USD/JPY IN FOCUS – USD IMPLIED VOLATILITY & TRADING RANGES TO WATCH
- The US Dollar edged marginally higher throughout Tuesday’s trading session as the DXY Index oscillates around a critical technical level
- The direction of the US Dollar will likely shift focus to counterpart price action in light of high-impact data releases scheduled for Wednesday on the forex economic calendar
- USD/CAD, GBP/USD and NZD/USD are expected to be the most volatile major US Dollar currency pairs while USD/JPY eyes a BOJ interest rate decision
USD price action climbed modestly on Tuesday judging by performance in the benchmark US Dollar Index (DXY). The slight rise in the broader US Dollar can be attributed largely to better-than-expected economic data on US industrial production and housing.
Looking ahead, the US Dollar will likely take cue from its major counterparts such as the Canadian Dollar (CAD), Pound Sterling (GBP) and New Zealand Dollar (NZD) considering event risk slated for Wednesday.
US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (JULY 2019 TO DECEMBER 2019)
The US Dollar Index has begun to show signs of perking up following its sharp slide to start December. Technical support currently resides around the 96.50-96.75 price zone, which is roughly underpinned by lows recorded throughout the month of July.
USD price action may continue to drift lower, however, if support-turned-resistance around the 97.25 mark stymies a rebound attempt. This area of confluent resistance is highlighted by the 23.6% Fibonacci retracement level of the US Dollar’s trading range since the printing its year-to-date high at the beginning of October.
US DOLLAR IMPLIED VOLATILITY & TRADING RANGES (OVERNIGHT)
The direction of the broader US Dollar over the short-term will nevertheless respond largely to factors isolated to counter-currency price action. This is considering high-impact event risk detailed on the forex economic calendar like a BOJ interest rate decision, inflation reports from the UK and Canada as well as a New Zealand GDP report, which brings spot USD/CAD, GBP/USD, NZD/USD and USD/JPY into focus.
Options-implied trading ranges are calculated using 1-standard deviation (i.e. 68% statistical probability price action is contained within the implied trading range over the specified time frame).
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