USD – Short Term Weakness but Medium Term Strength

February 14, 2018

3 min read

Dear Traders,

The USD has lost ground over the last few trading days and appears to be going into some more weakness in the short-term.

But signs are present that point towards a comeback in the not too distant future.

This analysis will take a quick look at several USD pairs to determine the short and medium term outlook.

Expect Weakness, Followed by Strength

The USD appears to have confirmed another swing of weakness across all pairs. The break of bearish trendlines of many fx pairs suggests that some could post another higher high against the USD, while others may only go into a corrective rally that will fail to post new highs. The charts below show some examples of this.

Either way, the USD weakness should be short-lived because many pairs are heading into the final stage of large trend structures. This cross-market correlation points strongly towards a broad USD recovery in the medium term.

Pairs like the EURUSD and NZDUSD could post one more higher high, while pairs like the AUDUSD and GBPUSD could be in a corrective rally that fade before reaching the previous highs.

Watch out for slowing momentum and complete wave structures in the anti-USD rallies we are seeing currently.

All the best along your trading journey

Hubert