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Technical Update - EURUSD, USDCHF and Dollar Index. Break out of Friday's volatile trading range key for direction

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Trading Friday was extremely volatile in Dollar pairs and of course also for the Dollar Index. However, the day ended at the same price levels as it started. Now, direction is likely determined by the break out of that trading range.
Check out the trading ranges and likely break out directions


EURUSD Friday spiked down to the 0.618 retracement of the December bull move at 1.0882. It is also the 0.382 retracement of the entire uptrend since October 2023, and test of the lower rising trendline.
There was – and still is – divergence on the RSI during the End-December bullish move suggesting exhaustion of the uptrend. However, if EURUSD is breaking above the peak of the very volatile Friday at 1.10 the RSI is set to break back above the 60 threshold possibly also back above its falling trendline thereby likely to cancelling the RSI divergence.

If that scenario plays out EURUSD is likely to test and take out the December peak at around 1.1140 with a potential move to 1.1275

A break below 1.0880 could see a swift sell-off down to the 0.786 retracement at around 1.0812. The rising 55 and 200 Daily Moving Averages will provide support int that region.

If 1.0880 is taken out a spike down to strong support at around 1.0730 should not be ruled out
eurusd d 0801
Source all charts and data: Saxo Group

USDCHF rebounded to the 0.50 retracement at 0.8576 Friday Similar to EURUSD and Dollar Index the price range of Friday’s volatile market is the range that needs to be broken.

A break above 0.8576 USDCHF is likely to move higher to 0.8634 – the 0.618 retracement - possibly to the 0.786 retracement at 0.8716 and the upper falling trendline

A bearish break of the range i.e., below 0.8455 USDCHF is likely to test the December low around 0.8332 and likely lower

RSI divergence is indicating the October-December bearish trend has exhausted and USDCHF is to rebounding higher from current levels
usdchf d 0801

The Dollar Index Friday spiked to the 0.618 retracement at around 102.76 only to collapse again

The Index could be caught range bound between peak and trough of Friday volatile market i.e., between 102.83 and 101.62.
If the Dollar Index is taking out the peak at 102.83 expect a move to the 0.786 retracem4ent at 103.42. A break below 101.62 the Dollar Index is resuming downtrend with downside potential to 101-100.32.

An RSI close above 60 threshold will confirm uptrend. A close below 40 will confirm the Dollar Index is resuming downtrend 
dollarindex d 0801

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