U.S. Dollar Price Action Setups: EUR/USD, GBP/USD, USD/JPY, and USD/CAD
Original analysis by James Stanley | Source: Forex.com
The U.S. Dollar is currently exhibiting a resilient performance despite softening expectations around potential rate cuts from the Federal Reserve. While inflationary pressures continue to moderate, the Fed maintains a cautious tone, suggesting a careful approach to monetary policy changes. Traders are navigating a complex market landscape with multiple currency pair setups unfolding, particularly around key USD-based pairs like EUR/USD, GBP/USD, USD/JPY, and USD/CAD.
This article provides an expanded technical overview of each pair, examining price action themes for potential short-to-medium-term trading opportunities.
Dollar Index (DXY) Overview
The U.S. Dollar continues to trade near recent highs, supported by expectations that the Federal Reserve will keep interest rates higher for longer. The Dollar Index (DXY) has rebounded from support near 103.00 and now trades close to this week’s highs. Momentum has picked up, but a strong resistance zone looms between 105.00 and 105.50.
Key technical factors:
– The DXY has made a strong recovery after briefly dipping below 104.00 earlier this month.
– RSI is climbing but not yet in overbought territory on the daily chart.
– Important support remains at 103.00, with stronger support at 102.50.
– Resistance sits around the 105.00 handle, with a major ceiling between 105.00 and 105.50.
If the Dollar pushes through the 105.50 resistance, it may signal further bullish continuation. However, a failure at this level could result in consolidation or a retracement toward the 103.00 zone.
EUR/USD: Downtrend Resumes Amid Hawkish Fed Theme
EUR/USD has come under renewed pressure as the U.S. Dollar gains strength. The pair has reversed from recent highs at 1.0885 and is now trading near the 1.0670 area. A lower high formation on the daily chart suggests that bears are gradually regaining control. The currency pair is now testing a significant support zone, and a clean break could open the door to further downside.
Key areas to watch on EUR/USD:
– Support at 1.0670 is critical. This level served as resistance during the March-April rallies and may now act as a pivot.
– A break below 1.0670 opens the path toward 1.0600 and potentially 1.0520.
– On the upside, resistance lies at 1.0790 and 1.0885.
Technical sentiment favors bearish continuation unless the pair reclaims 1.0790 quickly on a sustained daily close. The lower highs and aggressive rejections from resistance zones show that U.S. Dollar strength may continue dragging this pair lower.
GBP/USD: Selling Pressure Pulls Pair Toward Key Support
GBP/USD has mirrored the moves seen in EUR/USD, with bears taking control and dragging the price from recent highs near 1.2890. The pair is now probing the key 1.2500 level, which also intersects with the 200-day simple moving average. This area could act as a critical inflection point for traders to decide whether the longer-term bullish theme remains valid.
Price action insights:
– GBP/USD has built a descending channel pattern on the H4 chart, usually indicative of a deeper pullback.
– Support at 1.2500 is a historically significant level and marks the lower edge of the current price channel.
– Resistance lies overhead at 1.2635, followed by a key swing at 1.2700.
– RSI is close to oversold territory, suggesting potential near-term support.
If sellers push the pair below 1.2500, the case for bullish continuation is severely weakened. However, if bulls hold this support and regain momentum above 1.2635,
Explore this further here: USD/JPY trading.