Setting USD Expectations for the Week Ahead in EUR/USD, USD/JPY

Talking Points:

- EURUSD rebound short-lived; watching flag 1.2560-1.2675.

- AUDUSD turns back at 8-EMA; USDJPY supported above 108.25.

- In Wake of ECB and NFPs, EUR/USD More Data Driven than Before

Now at 12 consecutive weeks, the US Dollar's bull run is not only the longest of all-time, but is also perhaps showing some signs of potential weakness around the fringes. Whereas chart analysis is a focus on past price action, trading makes the jump to engaging the future; so we must be aware of potential landmines ahead.

Fortunately for the US Dollar, there are not many fundamental obstacles in its way this week. The only "high" rated event on the DailyFX US Dollar Economic Calendar for the week of October 5, 2014 is the release of the Federal Reserve's September meeting minutes on Wednesday.

A quiet calendar portends to exogenous influences having a greater sway on the US Dollar in the days ahead, and the recent breakdown in the 20-day correlation between the Dollar Index (DXY) and the 10-year US Treasury Note yield (USGG10YR) suggests that interest rate changes and yield curve shifts are having little to no influence on the buck:

If the focus isn't truly on US fundamentals, then outside influences as well as the market's technical environment will shape trading. Both EURUSD and USDJPY are offering definable levels to reference in their respective trends, and we'll watch these themes evolve in the days ahead as gauges of the US Dollar's broader bull run. See the above video for the technical review.

Read more: In Wake of ECB and NFPs, EUR/USD More Data Driven than Before

--- Written by Christopher Vecchio, Currency Strategist

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