US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/JPY, USD/CAD

US Greenback Speaking Factors:

  • The US Greenback has up to now spent October digesting the bullish transfer that confirmed with prominence in late-September.
  • This week sees the main focus shift to a key inflation report out of the US with the discharge of CPI on Wednesday. With the Fed’s potential tapering announcement across the nook on the November FOMC, the give attention to this information launch will possible be intense for danger developments.
  • The evaluation contained in article depends on value motion and chart formations. To study extra about value motion or chart patterns, try our DailyFX Training part.

The US greenback is continuous to digest the September breakout, with value motion now forming a symmetrical triangle over the primary eleven days of October commerce.

The USD broke out to a contemporary yearly excessive earlier than the tip of Q3, ultimately discovering resistance on the 38.2% Fibonacci retracement of final yr’s sell-off, plotted at 94.47. That led to a pullback in early-October commerce as costs pushed down to search out assist at prior resistance, taken from the 93.73 swing-high that had set in August. However that bounce was unable to take out Fibonacci resistance and value has since continued to coil, setting the stage for breakout potential with that CPI print now a little bit below 48 hours away.

To study extra about symmetrical triangles, try DailyFX Training

US Greenback 4-Hour Value Chart

US Dollar four hour price chart

Chart ready by James Stanley; USD, DXY on Tradingview

US Greenback Longer-Time period

For the This autumn technical forecast I initiated a bullish bias on the US Greenback, owed largely to a breakout formation that constructed over the previous 4 months. The USD had set an ascending triangle formation with horizontal resistance mixed with higher-low assist. Bulls started to interrupt the horizontal resistance in late-September, and with the shorter-term symmetrical triangle showing, mixed with the prior bullish development as a part of that breakout, and there’s one other formation at work: The bull pennant.

The bull pennant formation is usually approached with the intention of development continuation, hypothesizing that the latest breakout must relaxation because the contemporary higher-highs have problem eliciting contemporary patrons. However, if the drive that brought on the breakout within the first place can stay, there’ll usually be a present of purchaser assist at higher-lows.

And with inflation on the docket for Wednesday, that potential is there for bullish continuation eventualities within the USD with the present formation matching that backdrop.

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US Greenback Each day Value Chart

US Dollar Daily Price Chart

Chart ready by James Stanley; USD, DXY on Tradingview

EUR/USD: Brief-Time period Bear Flag

On a longer-term foundation there’s not a number of pleasure in EUR/USD in the mean time. The pair noticed one other bearish extension of the development final week however sellers slowed shortly after the institution of a contemporary low. The corresponding pullback hasn’t precisely been aggressive, with the bullish transfer off of final Wednesday’s lows capping out at round 60 pips.

The shorter-term setup could also be a bit extra thrilling right here, particularly with inflation numbers due on Wednesday. The US stories at 830 am on Wednesday however German inflation is launched forward of that, retaining the Euro within the highlight round these information factors.

Brief-term EUR/USD has constructed right into a bear flag formation, accented with a bullish channel on the backside of a bearish development. This retains the door open for bearish continuation eventualities and for short-term resistance, the prior spot of assist, taken from ranges round 1.1600 and 1.1664 stay of curiosity.

If neither of these ranges can maintain the excessive and if a broader pullback begins to point out, the prior assist zone at 1.1709-1.1736 has but to see resistance after the late-September breach of this key zone.

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EUR/USD Two-Hour Value Chart

EURUSD two hour price chart

Chart ready by James Stanley; EURUSD on Tradingview

GBP/USD Snap Again for Resistance Check

Final week noticed GBP/USD react on the underside of a key resistance zone comprised of two completely different Fibonacci ranges, spanning from 1.3649-1.3678. There was a response that totaled about 100 pips in that transfer, however sellers have been unable to interrupt a lot contemporary floor beneath 1.3550. That’s led to a bounce again into this resistance zone however this time, patrons have been capable of nudge up in direction of the highest facet of the realm round 1.3678, which has since held.

From the each day chart, this retains the door open for short-side swings. However, shorter-term, there’s an identical construct of higher-lows with that horizontal resistance, which produces an ascending triangle that may be adopted for short-term bullish breakout eventualities.

Given the charges dynamic, with the UK probably nearing a price hike within the effort of stemming inflation, any bouts of USD-weakness may play properly for topside right here in GBP/USD, significantly if Wednesday’s inflation comes out beneath expectations.

To study extra about ascending triangle formations, try DailyFX Training

GBP/USD 4-Hour Value Chart

GBPUSD four hour price chart

Chart ready by James Stanley; GBPUSD on Tradingview

USD/JPY: Huge Breakout to Close to Three-Yr-Highs

I’ve been speaking about this pair way more than standard for the reason that FOMC’s September price choice. When the financial institution warned of probably quicker price hikes, a lot of the eye turned to the USD. However JPY might have an much more aggressive case for focus from FX merchants due to the deductive price dynamic that can and has begun to play out.

The primary quarter of this yr can be utilized as a proxy: As US charges have been flying larger in anticipation of restoration and hope produced by vaccines, US charges jumped and this drove USD power in lots of FX pairs. That power was on full show in USD/JPY as a result of not solely was the USD well-bid on the again of upper price themes, however JPY was very bearish because the foreign money may then be used with carry trades once more. With a Financial institution of Japan that’s been sitting on damaging charges since 2016, there’s little hope of change anytime quickly, so in a dynamic like USD/JPY, the place one foreign money is bid on the again of upper charges, the low-rate Yen could possibly be a sexy counterparty to permit for explosive strikes.

That’s continued in USD/JPY, and numerous different pairs as Yen weak spot tracks together with larger US charges. This was the rationale for setting GBP/JPY as my ‘prime commerce for This autumn,’ seeking to harness each larger price expectations out of the UK to go together with this premise for JPY weak spot.

USD/JPY crossed an enormous marker right this moment, leaping as much as a close to three yr excessive. The zone of prior resistance had held the highs in 2019, 2020 and, till this morning, 2021. It runs from a long-term Fibonacci stage at 111.61 as much as the psychological stage of 112.50.

With costs within the pair so overbought in the mean time, awaiting a pullback to assist at this prior spot of resistance appears to be a extra prudent method of transferring ahead.

USD/JPY Weekly Value Chart

USDJPY weekly price chart

Chart ready by James Stanley; USDJPY on Tradingview

USD/CAD Sinks By means of Help as Oil Surges Previous 80

On the brief facet of the US Greenback, USD/CAD has began to look extra an extra engaging. The Canadian Greenback has remained pretty heavy within the pair of latest. Notably, because the USD was leaping to contemporary highs towards most different currencies over the previous couple of weeks, USD/CAD was pinned right down to assist final week, ultimately falling via the 1.2621 spot.

That breakdown theme hastened on Thursday and Friday as value motion fell via the underside of a symmetrical triangle and breaking beneath the 1.2500 psychological stage. This could hold USD/CAD as one of many extra engaging short-USD candidates.

Potential lower-high resistance exists on the 1.2500 psychological stage and a little bit larger, round 1.2546, which was the prior swing-low simply earlier than final week’s breakdown.

To study extra about psychological ranges, try DailyFX Training

USD/CAD Each day Value Chart

USDCAD Daily Price Chart

Chart ready by James Stanley; USDCAD on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and comply with James on Twitter: @JStanleyFX


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