Title: US Dollar Price Action Analysis: Key Setups in EUR/USD, GBP/USD, USD/JPY, USD/CAD
By: James Stanley, Forex.com
Expanded and reformatted by AI
As major global currencies react to economic data, central bank signals, and global risk sentiment, the US Dollar (USD) continues to be the centerpiece of many critical forex setups. Following recent market developments in October 2025, the Greenback finds itself at pivotal levels against major peers such as the Euro (EUR), British Pound (GBP), Japanese Yen (JPY), and Canadian Dollar (CAD). This article will provide an in-depth analysis of price action setups for four major USD pairs: EUR/USD, GBP/USD, USD/JPY, and USD/CAD.
Market Context Summary
As of late October 2025, the US economy continues to display relative resilience compared to other developed markets. Economic indicators including labor market data, inflation reports, and Federal Reserve commentary have contributed to the USD’s performance amid a highly uncertain global outlook.
Several key drivers of USD price action currently include:
– Fed policy trajectory, with markets now debating whether US rates will stay higher for longer.
– Diverging central bank policies between the US Federal Reserve and other major central banks (ECB, BoE, BoJ, BoC).
– Ongoing geopolitical tensions, particularly involving energy markets and US-China trade.
– Risk aversion in global markets that often leads to safe-haven demand for the USD.
Each major USD pair currently reflects these broader macroeconomic themes, with technical setups signaling potential turning points or continuations. Below are detailed breakdowns of the main Dollar pairs.
EUR/USD Breakdown
The euro has been under pressure over the past few months as the European Central Bank (ECB) has signaled an increasingly dovish outlook amid a weak Eurozone economy. Meanwhile, economic outperformance in the US has boosted dollar strength.
Key Technical Observations:
– EUR/USD has been trending lower since mid-July, forming a series of lower highs and lower lows.
– The pair recently tested strong support around the 1.0500 psychological level, which coincides with prior lows from April and October 2023.
– A descending trendline dating back to July continues to cap rallies around the 1.0650–1.0700 region, maintaining bearish momentum.
Traders should consider the following levels:
– Resistance at 1.0650 and 1.0700 remains key; a breakout above this zone may indicate a deeper retracement.
– Initial support sits near 1.0500, followed by 1.0450 and 1.0350 (yearly lows).
– Bearish continuation below 1.0500 would open the door toward deeper downside targets near 1.02.
Fundamental Perspective:
– ECB’s latest guidance continues to lean dovish, with inflation projections tempered and renewed risks of a contraction in Q4 GDP.
– With the Fed potentially holding rates at elevated levels through 2026, the interest rate differential still favors USD buyers.
– The energy crisis and declining German industrial output add negative weight to the euro’s outlook.
GBP/USD Analysis
The British Pound has also come under selling pressure as the Bank of England (BoE) faces increasing signs that the UK economy is stalling. Inflation remains high, but weak productivity and sluggish GDP growth are putting a ceiling on future rate hikes.
Technical Highlights:
– GBP/USD has pulled back significantly from the July peak near 1.3140, dropping below the long-term support trendline from early 2023.
– The pair recently tested lows near 1.2100, which represents a key technical level and a prior demand zone.
– A descending channel has been forming since mid-July, consistent with a bearish continuation pattern.
Key Levels to Watch:
– Resistance: 1.2300 then 1.2450. These zones coincide with Fibonacci retracement levels of the broader sell-off.
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Read more on USD/CAD trading.