Potential signal
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I am selling this market if we get close to the 310.50 area and see the 10-year yield in America drop simultaneously.
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I would set a stop near 312.50, and target 305 below.
The US dollar rallied quite nicely against the Hungarian forint as interest rates jumped in America. That being said, this is one of those pairs that I’m looking for a selling opportunity, mainly due to the fact that the interest rate differential favors Hungary, and of course, we also have to keep in mind that this reaction to the jobs number in America on Friday could end up being a short-term move.
Ultimately, I am just simply going to let the dollar do its thing for a day or two, looking for some type of exhaustion that I can sell into. There’s an area right around the 312 level that has the 50-day EMA there as well, so I think it is a nice selling opportunity if we see signs of weakness.
Technical Targets and Interest Rate Setup
If I can combine weaknesses right around that 50-day EMA and perhaps weakness in the 10-year yield, maybe breaking below the 4.50% level, then I think you have a decent setup to start shorting. I have no interest whatsoever in buying the dollar against the Hungarian forint because quite frankly, there are other currencies that I would rather sell against the greenback if the US dollar did in fact continue to climb.
If this market were to somehow break above the 316 level, then we could go looking to the 320 level, but really at this point in time, I think it would take a significant shift in attitude overall and of course the way interest rate markets are moving to make that actually happen.
Ultimately, I’m just going to be very patient on Monday and take advantage of any type of weakness that shows up that I can take advantage of. I have no interest in trying to buy this market, and once the markets calm down a bit, I am looking for a continuation of the last several months here.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
