As the US Dollar Struggles Here are Commerzbank's Notes on GBPUSD, EURUSD and AUDUSD

The dollar struggles to find buyers ahead of the mid-month crunch meeting at the US Federal Reserve. This offers traders opportunity on a number of the most favoured USD pairs.

Lately, the USD has not been profiting on strong US economic data.

On December 4, the US non-farm payroll report for November came is strongly at 211,000 new jobs added, a steady 5.0% unemployment rate and an upward revision for the tow previous months, yet the USD did not rally.

Could it be that investors are being cautious on pushing the dollar too far with memories still fresh of the Draghi letdown on the 3rd of December?

In terms of the European Central Bank (ECB), the markets had anticipated and prepared itself for a very aggressive stimulus package but the end result turned out to be disappointing.

This event appears to be a lesson learned for investors, as they remain mute on the USD, simply going into a “wait and see” mode.

Another reason for muted USD upward movement may be that investors are now closing their positions for the year.

ABN AMRO has noted that, in general, investors have been “short euro, long US dollar, short emerging market currencies, short metals and short oil.”

The bank states, “The perception that we may have seen the move for the year could have triggered the closing some of these positions in currency and commodity markets.

“However, the drop in oil prices below the previous lows appears to have halted or even reversed this process until after the Fed meeting on 16 December.

“When the Fed meeting is out of the way, there is a possibility that investors close the books for the year resulting in a recovery of the heavily battered assets this year.”

Nonetheless, the probability of a US Federal Reserve rate hike still remains high with markets 80% sure of a rise.

Commerzbank's USD Short-Term Trade Recommendations

To take advantage of the USD's near term pressure, Commerzbank recommends the following trades:

EUR/USD

“EUR/USD is upside corrective and so far has reached the 1.1032 200 day ma. It remains bid and there is scope for the 1.1087/97 September low and 28th October high.

“Currently we remain unable to rule out an advance towards key resistance, which remains the 1.1228/17 2014-2015 downtrend and 55 week ma and while we it is possible that these are retested we look for the market to fail here.”

“Current Position: Small longs from 1.0850 exited 1.0975 and 1.1030. Recommended trade: Reinstate tiny longs at market, add 1.0960, stop 1.0920. Partially cover 1.1125 and exit the remainder 1.1190, looking to resell – stops over 1.1250.”

GBP/USD

“GBP/USD as suspected we saw recovery ahead of the 1.4860/78.6% retracement of the move up from April and we note that the near term resistance line has been eroded.

“Currently we remain unable to rule out an extension to the 1.5232 55 day ma and the 1.5312 3 month downtrend.

“Current trade: Small longs established 1.5012 partially covered 1.5125 and the rest exited 1.5150. Recommended Trade: Reinstate shorts 1.5290, stops 1.5325.”

AUD/USD

“AUD/USD has sold off to the 55 day ma at 0.7183 and has seen a major rebound from here. Ideally we will see intraday rallies fail around 0.7333 for losses into the low 0.7000 region – the intraday Elliott waves counts remain negative.

“Below the market lies the 0.7017 November low and the September low at 0.6940. Current Position: Short 0.7241 Recommended Trade: stops .7385. Exit 0.7020.”