Dollar Seasonality

by Thinus Briers | Feb 6, 2024 | Forex Analysis

This week we saw positive USD news (from the non farms) push the DXY index to break and close above the 200 ema. Every bit of US news looks like it’s been carefully sifted through in order to get as many clues as possible in order to gauge when an interest rate decrease is on the cards.

This week I want to take a look at the USD seasonal tendency in order to help everyone plan a little better for the year. Here are some general tendencies that traders have historically observed in the U.S. dollar (USD) per month:

January:

The U.S. dollar may exhibit strength early in the year, sometimes referred to as the “January Effect.” This strength can be influenced by factors such as portfolio rebalancing, positioning for the new year, and economic data releases.

February to April:

The first quarter of the year may see continuation or reversal of trends from the previous year. Economic data releases and developments in global markets can influence the USD during this period.

May to July:

The summer months can be characterised by lower volatility and reduced trading volumes, leading to a potential “summer lull.” However, it’s important to note that market conditions can vary, and not every year will exhibit the same behaviour.

August:

August may see a return to increased market activity as traders come back from summer vacations. However, the extent of volatility can depend on various factors, including economic data releases and geopolitical events.

September:

September can be a significant month for the USD as traders return to the market after the summer break. The currency may react to economic data, central bank decisions, and other market-moving events.

October to November:

The fourth quarter of the year may bring heightened volatility, driven by factors such as earnings reports, economic data releases, and potential shifts in market sentiment. Traders often closely watch for any year-end positioning.

December:

The end of the year may see increased volatility, and the U.S. dollar has historically exhibited strength in December. This strength can be influenced by factors such as tax considerations, repatriation of funds, and portfolio adjustments.

Let’s look at some key charts….
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DXY chart:
Positive $ news on Friday created a break and close above the 200ema.

Gold:
Buyers stepped in at the BIG 2000 range.

Oil;
Failed at the 200 ema. Now back at the $70 range.

Bitcoin:
Found buyers at the 40000 level

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Red flag news:
AUD interest rate news this week.

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MAJORS

EUR/USD: News has changed my bias, I’m looking to short from the current position. 1.0800 level.

USD/CHF: Looking to long on shorter timeframes. (See video)

GBP/USD: Also looking to long on shorter timeframes. (See video)

AUD/USD: Looking to short from 0.6600 again.

NZD/USD: I’m looking at 0.6100 to short.

USD/CAD: 1.3500 is a MASSIVE level for this pair. I want to see how it reacts at this level.

USD/JPY: Leaving alone again. Might be something on the much smaller timeframes, but there are much better setups elsewhere.

CROSSES

EUR/GBP: Short from 0.86400

EUR/CAD: Short from 1.4650

AUD/CAD: Short from 0.8900

GBP/AUD: Looking at 1.91400 to long

GBP/CAD: Looking to long from 1.6800

GBP/CHF: See video for an update on the pattern we have been following.

AUD/NZD: I want to see what price does at around 1.0800. Remember that there is AUD interest rate news this week.

As always, remember correlation! -Especially when taking more than one JPY trade!

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M3 -Shorter timeframes.

I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them onto Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if the price is too near a trend line or pivot. Ideally, you want to buy when the price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.

New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.

We are NOT a “tipping service” our aim is to teach you how to trade for yourself. Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen.

Regards

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