15/8 USD update

Prepared by John Hardy, FX Strategist, Saxo Bank

• Dollar index made a scary throwback this week to weaker levels – but this was stopped almost EXACTLY at the 0.618 Fibo retrace of the move from 1.4400+ to 1.4095 around 1.4315 in EURUSD, for example. This is a great Fibo indicator at market turnarounds. This is the line in the sand now if the USD bears want to prove themselves. If EURUSD follows through below that 1.4095 level, we could be looking very quickly at a challenge of 1.3750 and even the 200-day moving average below 1.3500.
• We have yet to see final confirmation of this move stronger in the USD, but the set up looks far more promising than it did yesterday. Just look at the plethora of bullish daily candlesticks after today’s action.
  
• NOTE: the view is only as good as the proofing the action – so if we see 1.4320+ again in EURUSD and AUDUSD back above 0.8400 again – it’s back to the drawing board…..