US Dollar Technical Analysis: EUR/USD, USD/JPY, USD/CAD
Original Analysis by David Scutt | Source: Forex.com
The US Dollar (USD) experienced a mixed performance in recent trading sessions, influenced by economic data, monetary policy expectations, and global risk sentiment. Forex traders have closely monitored the EUR/USD, USD/JPY, and USD/CAD pairs for signs of dollar strength or weakness. This article provides an in-depth technical analysis of these major currency pairs, examining key support and resistance levels, recent price action, and potential directional setups.
Overview of the US Dollar Landscape
The dollar’s performance remains heavily influenced by:
– Macroeconomic data from the United States, especially inflation and labor market reports
– Investor sentiment around risk assets and bond yields
– US Federal Reserve policy expectations, particularly the path of interest rates
– Geopolitical tensions and their effects on safe-haven flows
After a strong first quarter, the dollar saw some cooling in April and May, but strength has recently returned. The Dollar Index (DXY) rebounded off previous support levels, hinting at a potential resurgence in bullish momentum.
EUR/USD Technical Analysis
The EUR/USD pair has been under persistent selling pressure this year. Despite temporary periods of respite and consolidation, the pair has continued to trend downward. Most recently, it fell back below the psychological 1.0700 level, and both short-term price action and broader trend dynamics suggest more weakness may be in store.
Key EUR/USD Levels:
– Support:
– 1.0650: Region where buyers previously emerged in April and early May
– 1.0600: A psychological level and historical inflection point
– 1.0520: Year-to-date low, critical multi-month support level
– Resistance:
– 1.0700: Round number and former support, now resistance
– 1.0745: 50-day moving average (daily)
– 1.0790–1.0800: Zone of technical confluence marking March highs
Price Action and Momentum:
– The EUR/USD pair recently fell below its 20- and 50-day moving averages, signaling renewed short-term bearish bias
– Momentum indicators such as RSI remain near 40, below the neutral 50 level, which aligns with continued downside risk
– A failure to maintain above 1.0700 resulted in fresh selling pressure
– Traders looking for trend continuation may target a retest of the 1.0600 or 1.0520 areas if the current momentum sustains
Fundamental Drivers:
– Diverging policy expectations between the European Central Bank (ECB) and the US Federal Reserve
– Weak eurozone data, particularly inflation and growth numbers, have added to bearish sentiment
– Hawkish Fed commentary continues to support the dollar relative to the euro
Short-Term Strategy Outlook:
– Bearish bias remains prevalent unless the price can close above 1.0745 and sustain 1.0800
– A break below 1.0600 opens the door for a possible test of the 1.0520 low and potentially new yearly lows
– Medium-term traders may look for short entries on rallies toward resistance zones, with protective stops above recent highs
USD/JPY Technical Analysis
The USD/JPY pair has experienced heightened volatility due to market speculation over Bank of Japan (BoJ) intervention. While the yen has seen brief periods of strength, the pair remains in a strong uptrend overall, supported by a resilient US dollar and the wide interest rate differential between the US and Japan.
Key USD/JPY Levels:
– Support:
– 153.00: Previous breakout area now turned into dynamic support
– 151.75–152.00: Potential intervention zone from Japanese authorities
– 150.00: Psychological level and former resistance
– Resistance:
– 156.00–156.25:
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