Title: U.S. Dollar Price Action: Key Setups in EUR/USD, GBP/USD, USD/JPY, and USD/CAD (October 2025 Outlook)
Author: Adapted and expanded from original work by James Stanley, Forex.com
Published Date: October 21, 2025
The U.S. Dollar (USD) continues to influence global currency markets dramatically as traders remain focused on the Federal Reserve’s monetary policy outlook, economic data releases, and geopolitical developments. In this article, we examine four major USD currency pairs (EUR/USD, GBP/USD, USD/JPY, USD/CAD), analyzing recent price action, key technical patterns, and potential paths forward.
With continued volatility in the markets and the U.S. economy showing signs of divergence from global counterparts, traders and investors have turned to technical and fundamental cues to position effectively.
Let’s explore each pair in detail:
Overview: U.S. Dollar Index (DXY)
The U.S. Dollar Index (DXY), which measures the greenback against a basket of major currencies, has experienced heightened volatility. The index attempted a breakout over the 106.50 resistance level in early October before pulling back sharply. This retracement brought the index to a key support trendline extending back to the July lows.
Key Observations:
– The index formed a rising wedge pattern on the daily chart, typically a bearish formation, suggesting potential downside risks
– After touching multi-month highs, a retraction was observed as Treasury yields surged, weighing on risk sentiment
– A dovish shift in recent Federal Reserve comments, coupled with weakening retail sales data, has contributed to USD softening
If bullish momentum reasserts itself, the DXY would need to reclaim the 105.75-106.20 band. On the downside, a breach below 105 could open the door to deeper retracements toward 104.30 and the 103.50 area.
Key Levels to Watch:
– Resistance: 106.20, 106.80, 107.30
– Support: 105.10, 104.30, 103.60
EUR/USD: Struggles Near Resistance
The EUR/USD currency pair recently gained momentum as the USD pulled back from highs. Euro bulls have found hope, but sustained upward movement remains uncertain amid ongoing European economic weakness and the ECB’s cautious tone.
Technical Breakdown:
– From mid-summer 2025 through early fall, EUR/USD was in a strong downtrend, largely driven by a buoyant Dollar and weak Eurozone figures
– The pair bottomed out around 1.0450 before rebounding to test the 1.0630 resistance area—a zone that previously acted as campaign support in May and June
– Bulls pushed into 1.0650 and 1.0670 but found resistance due to profit-taking and cautious institutional positioning
If EUR/USD manages to close above the 1.0630–1.0700 zone, the next bullish target lies at the 1.0765 and 1.0830 resistance levels. However, failure to hold support at 1.0530 or 1.0450 could indicate the return of bearish momentum.
Fundamentals Supporting the Setup:
– ECB’s reluctance to tighten further despite sticky inflation weighs on confidence
– Economic data from Germany and France continue to show contraction, emphasizing Eurozone stagflation risks
– Any shift in U.S. Federal Reserve policy or weaker U.S. data could lift EUR/USD despite Euro-area challenges
Key Levels:
– Resistance: 1.0700, 1.0765, 1.0830
– Support: 1.0530, 1.0450, 1.0375
GBP/USD: Higher Lows Suggest Potential Bottoming
Sterling has shown bullish resilience over the past two weeks, building off a rebound from the 1.2100 level. A potential inverted head-and
Read more on USD/CAD trading.