**US Dollar Technical Analysis: Key Trends in EUR/USD, USD/JPY, and USD/CAD**
*Original reporting by Matt Weller, CFA, CMT, from Forex.com*
The US Dollar (USD) remains a central focus for traders navigating current market conditions, particularly in relation to three major currency pairs: EUR/USD, USD/JPY, and USD/CAD. Driven by a combination of shifting US Federal Reserve expectations, strong economic fundamentals, and global monetary divergences, the Greenback has experienced significant momentum. This technical analysis deeply explores the major USD pairs to provide traders and investors with insights into potential price action and strategy considerations.
## Overview: The US Dollar in Context
As of mid-2024, the US Dollar Index (DXY), which measures the value of the dollar against a basket of major global currencies, has demonstrated resilience. The primary driver remains the shifting monetary policy rhetoric out of the Federal Reserve. With inflation still hovering above the Fed’s 2% target, policymakers, including Chair Jerome Powell, have signaled a cautious stance on rate cuts, which has in turn provided support to the dollar across major pairings.
Coupled with relatively robust economic data—including stronger-than-expected Q2 GDP growth, persistent inflation in key sectors, and a tight labor market—the US dollar has maintained its strength relative to peers. Let’s now take a deeper look into the price action of three key USD currency pairs: EUR/USD, USD/JPY, and USD/CAD.
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## EUR/USD: Bullish Attempt Stalls Below Key Resistance
Despite intermittent rallies, the EUR/USD pair continues to struggle with maintaining bullish momentum. The euro, weighed down by stagnant Eurozone growth and a more dovish stance from the European Central Bank (ECB), faces persistent headwinds relative to the Greenback.
### Technical Analysis:
– **Resistance Zone**: The 1.0900 to 1.0920 zone has acted as a firm resistance level. This area corresponds with the 100-day Simple Moving Average (SMA) and a falling trendline that formed from highs in late 2023. Breaks above have been met with strong selling pressure, emphasizing seller interest near this zone.
– **Support Levels**: Near-term support lies at 1.0720, which provided a buffer on recent dips. If broken, the next key support area would be around 1.0600, corresponding with March lows and a longer-term Fibonacci retracement level.
– **Momentum Indicators**: The Relative Strength Index (RSI) hovers around the neutral 50 mark, indicating a lack of decisive momentum for now. MACD histogram is faintly positive but does not suggest a strong bullish impulse.
– **Outlook**: The pair remains within a broader downtrend, and unless buyers push EUR/USD above 1.0920 convincingly, bears may continue to assert control. The ECB’s dovish tilt and divergence with the Fed’s more hawkish bias provide a fundamentally bearish backdrop.
### Fundamental Considerations:
– The ECB is widely expected to maintain or even cut rates further as inflation continues to ease in the Eurozone.
– Recent PMI data illustrates economic stagnation across major Euro Area economies, leading to weakened investor confidence.
– Without a significant shift in European inflation or economic performance, the euro is likely to remain under pressure going forward.
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## USD/JPY: Dollar-Yen Breakout Gains Traction
One of the most aggressively trending USD pairs in recent months has been USD/JPY, as the Japanese Yen (JPY) continues to weaken amid the Bank of Japan’s ultra-accommodative monetary stance. Despite a recent symbolic policy tightening, the BOJ’s reluctance to normalize interest rates continues to weaken the JPY overall.
### Technical Analysis:
– **Breakout Levels**: USD/JPY recently broke above the 152.00 level, a price that previously prompted concern from Japanese officials hinting at potential forex intervention. However, with little
Read more on USD/CAD trading.