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US Dollar Price Action Setups for Q4: EUR/USD, USD/CAD, USD/JPY


US Greenback, EUR/USD, USD/CAD, USD/JPY Speaking Factors:

  • Final week I checked out an ascending triangle within the US Greenback. That formation has since led to a bullish breakout with the Dollar pushing as much as recent yearly highs.
  • In the present day marks the beginning of This fall, and with the Fed just lately warning of price hikes as early as subsequent yr, this may preserve help behind the bid within the USD.
  • Subsequent week’s NFP report is vital as that is the one NFP report that the Fed will see between September and November price selections. Will the information be sturdy sufficient to permit for the Fed to make a taper announcement subsequent month?

With at this time marking the start of This fall, I wished to take a step again to take a look at some longer-term charts across the US Greenback.

Whereas the Dollar spent the again 9 months of final yr promoting off, the primary 9 months of this yr have been marked by imply reversion as worth motion retraced about 38.2% of that prior sell-off. That 38.2% Fibonacci retracement got here into play yesterday, on the ultimate day of Q3, and has to this point held the excessive in DXY.

To be taught extra about Fibonacci, take a look at DailyFX Training

US Greenback Weekly Value Chart

US Dollar Price Action Setups for Q4: EUR/USD, USD/CAD, USD/JPY

Chart ready by James Stanley; USD, DXY on Tradingview

However maybe extra urgent than the resistance that’s already come into play is what the USD could have in retailer for this quarter.

It seems as if the door is open for the USD to interrupt out of its sample of imply reversion proven within the first 9 months of 2021 commerce. The forex has spent the previous 5 months constructing in an ascending triangle formation – which is commonly approached with the intention of bullish breakouts. And earlier than This fall even began, that breakout began to take maintain, with costs leaping past this resistance to a recent 2021 excessive, finally discovering sellers on the Fibonacci degree checked out above.

This, plus the Fed’s stance of shifting away from the uber-loose insurance policies which have punctuated the backdrop because the coronavirus got here into the equation can preserve bulls on the bid as we kick off the ultimate quarter of the yr.

In order for you the total forecast, John Kicklighter took care of the basics as I regarded on the techs within the US Greenback for the This fall forecast from DailyFX.

US Greenback Day by day Value Chart

US Dollar Price Action Setups for Q4: EUR/USD, USD/CAD, USD/JPY

Chart ready by James Stanley; USD, DXY on Tradingview

EUR/USD With Deeper Bearish Potential

For bullish USD methods, the brief facet of EUR/USD can stay a horny theme. The ECB is in a troublesome spot with each weak development and excessive inflation, and with the Fed taking over a tone in the direction of ‘much less unfastened’ financial coverage, this may expose the pair to additional losses.

The issue, at the very least near-term, is simply how rapidly the transfer has built-in over the previous month. After topping out round 1.1900 in early September sellers have already pushed worth to a recent yearly low, taking out the 1.1600 degree alongside the way in which.

Beneath worth motion is a key zone operating from a Fibonacci degree at 1.1448 as much as the psychological degree of 1.1500. The August swing-low, taken from round 1.1665, might be re-purposed as resistance potential, and that may be spanned as much as the 1.1709 Fibonacci degree to create a ‘zone.’

EUR/USD Day by day Value Chart

US Dollar Price Action Setups for Q4: EUR/USD, USD/CAD, USD/JPY

Chart ready by James Stanley; EURUSD on Tradingview

USD/CAD: Somethings Going to Give

USD/CAD has been a reasonably clear pair to work with USD themes to date this yr. Within the first 5 months, at the same time as USD was basing help and operating greater on restoration hopes, USD/CAD continued to sell-off.

The Financial institution of Canada beat the Fed to the punch relating to coverage lift-off, and the BoC began speaking about slowing bond purchases in April and this gave the Canadian Greenback one other shot-in-the-arm, with USD/CAD persevering with to sink till lastly bottoming out simply 2 pips above the 1.2000 psychological degree.

That led to short-term reversal themes in Q3 that noticed the pair begin to claw again prior losses. However, for the previous month and alter, course has been missing: The pair has constructed right into a symmetrical triangle with each lower-highs and higher-lows. This formation is commonly indicative of digestion, forward of a probably giant transfer.

So far as biases are involved: There’s long-term help serving to to cauterize the lows in that formation, and that spans between two Fibonacci ranges of notice, at 1.2622 and 1.2635. This identical zone was help in early-2021 earlier than turning into resistance in April after which July. It’s accented in inexperienced on the under chart.

To be taught extra about working with symmetrical triangles, take a look at DailyFX Training

USD/CAD Weekly Value Chart

US Dollar Price Action Setups for Q4: EUR/USD, USD/CAD, USD/JPY

Chart ready by James Stanley; USDCAD on Tradingview

USD/JPY Exams Massive Resistance to Begin This fall

Given the dynamics in charges, it could possibly be an enormous quarter for the Yen and in-turn, USD/JPY. This theme was on full show in Q1 and the Fed didn’t even point out greater charges, this was merely the market making an attempt to get in entrance of what it thought would inevitably occur. And whereas the timing was early, the decision doesn’t seem like improper because the Fed has began to put the groundwork for what so many have been on the lookout for earlier this yr.

This could preserve the topside of USD/JPY as attention-grabbing, however there’s only one downside: A large zone of resistance that’s to date held the highs in 2019, 2020 and to date in 2021. This zone runs between a long-term Fibonacci degree at 111.61 and the psychological degree at 112.50. If bulls can break by this zone, there could possibly be some vital room to run on the upside.

However, doubtless, for this to occur, we’ll must see charges proceed to run-higher within the US which additionally means we’ll doubtless must see some sturdy knowledge early in This fall to help the theme.

USD/JPY Weekly Value Chart

US Dollar Price Action Setups for Q4: EUR/USD, USD/CAD, USD/JPY

Chart ready by James Stanley; USDJPY on Tradingview

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

Contact and comply with James on Twitter: @JStanleyFX



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