Dollar is doing well on the eve of December sell-off

Last week’s Forex market showed us pretty strong growth of the British Pound and the fall of the Japanese Yen.
The U.S. economy is still growing, but there are some fears of a pending recession. However, the U.S. stock index S&P 500 ended the week close to its all-time highs. However, there are increasing fears about U.S. – China economic relations due to tensions over Hong Kong.
There are few long-term trends in the Forex market, except for the bullish trend in USD/JPY, and a bearish trend in the EUR/GBP currency cross. We wouldn’t like to go short on EUR/GBP in the near term as we think that Pound will get weaker over the next week because we are getting closer to the date of the British general election.
The USD/JPY weekly price chart shows a bullish candle which formed last week and closed within its highs. Technically speaking, the USD/JPY is pretty oversold as the Cayman indicator shows that there are only 26% of buyers despite the fact that the pair has been growing since August.

These are positive signs for bulls and we are going to open long positions amid this buyers’ trend.
Talking about the pound over the past 6 weeks, it’s worth noting that the price stayed within a range and this pattern is usually called a bullish flag. The price is ready to break the 1.3000 resistance area if the Government secures a solid majority in Parliament on the 12th December U.K. election which would provide a boost for the British Pound.

This bullish consolidation is a technical pattern. The best level to long in this pair is the bottom line of the flag at 1.28 but buying GBP at market prices is also a decent option in this case.
Technically, the Euro had a little positive move on Friday and ended up forming a bullish engulfment on the 4-hour chart. With this in mind, it’s very likely that the market will keep moving back and forth mainly with the sellers’ pressure up to 1.08 in the long-term.

Moreover, if we break down below the lows of this past week, we probably will find the market testing the 1.09 level rather quickly.

To sum up, here are our targets for:
USDJPY – buy up to 111
GBPUSD – buy up to 1.3080 for a medium-term period
EURUSD – sell up to 1.09 for a long-term period

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