The Dollar got a hit tonight with a new variant of Corona on the horizon. So far, things are still unclear and I am not a virologist. But with respect to the general market reaction my advice in the last Morning Call #19 to watch risk sentiment and therefore USDCHF and USDJPY carefully is starting to pay off.
At time of writing the Dollar-Index trades at 96.437 (-0.35%) but still in bullish territory above the 95 level. With US on thanksgiving holidays the liquidity is low and the sell off could be just a short countermovment within the general upward trend. Nevertheless I take this overnight sell off seriously especially because DXY stopped its rally at 96.942 just 0.88% below my mid-term target of 97.806 (mar2020 highs).
I fully understand the reaction in USDJPY and USDCHF as both, japanese Yen and swiss Franc, are safe-haven currencies whereas the rally in EURUSD seems to be above all position driven.
EURUSD -- 1.1261
The mid-term support level around 1.1174/68 has held for now after the pair has printed a new yearly low at 1.1186 on wednesday. Should Euro close clearly above 1.1250 this week I expect a more sustainable relief rally in the next sessions. After the 1.1300 mark the currency pair could target 1.1375 and 1.1415 (mid Bollinger band).
USDCHF -- 0.9268
Back in the triangle chart formation we have to establish a false break if the candle is still big red at tonights close. The stop for shorts is well defined now. Around 0.9369 (high of 30sep) and 0.9374 (high of 24nov) you can place your exit for short strategies. Cautious traders wait for the weekly close.
USDJPY -- 114.07
The currency pair is still trading within the long-term resistance zone around 114/115. I like the pair lower but therefore we need a daily close below 113.75 for a clearer picture. The high of the week at 115.52 was already outside of the resistance zone and we should keep thin US holiday liquidity in mind. A clear breakout of the trading range with a daily close above 115.25 respective below 113.75 should be waited for.
Good luck,
Sebbo