Analyst Picks

Michael Boutros , Technical Strategist

Michael Boutros
My Picks:  Near-term Trade Setups in USD/CAD and NZD/USD
Expertise:  Technical
Average Time Frame of Trades:  1-3 Days

Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

USD/CAD Price Chart - Loonie 120min

USD/CAD Price Chart - Loonie 120min - US Dollar vs Canadian Dollar Technical Outlook

In my latest Canadian Dollar Price Outlook we highlighted near-term confluence support at 1.3175 while noting that a break, “below this threshold is needed to mark resumption targeting more significant support at the yearly low-day close / 100% extension at 1.3105/23 – look for a bigger reaction there IF reached.” Loonie is testing this key zone today in New York trade.

While the broader outlook remains weighted to downside, the immediate short-bias may be at risk heading into this region. Initial resistance now at 1.3151 backed by the weekly open at 1.3211. Bearish invalidation now lowered to 1.3258. Looking for a rebound to fade off one of these levels targeting a move towards 1.3052/67. Review my latest USD/CAD Weekly Price Outlook for a look at the longer-term Loonie technical trade levels.

New to Forex? Get started with our Beginners Trading Guide!

NZD/USD Price Chart - Kiwi 120min

NZD/USD Price Chart - Kiwi 120min - New Zealand Dollar vs US Dollar Technical Outlook

In last week’s Kiwi Price Outlook we noted that NZD/USD recovery was approaching, “initial resistance targets at 6528/33 and ultimately a topside breach of this formation is needed suggest a more significant low is in place.” Price broke out just one day later with the advance now targeting the resistance at 6705/12 – a region defined by the 2019 open and the 50% retracement of the yearly range.

The focus is on a reaction off this zone on the back of a seven-day advance in Kiwi with the immediate long-bias at risk into the yearly open. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops – be on the lookout for possible topside exhaustion here. Interim support 6657 backed by the June trendline (currently ~6610). Bullish invalidation now raised to the weekly open at 6589. Review my latest NZD/USD Weekly Price Outlook for a look at the longer-term Euro technical trade levels.

NZD/USD Trader Sentiment

NZD/USD Trader Sentiment - Kiwi Positioning - New Zealand Dollar vs US Dollar Price Chart
  • A summary of IG Client Sentiment shows traders are net-long NZD/USD - the ratio stands at +1.07 (51.6% of traders are long) – neutral reading
  • Traders have remained net-long since April 2nd; price has moved 3.3% lower since then
  • The percentage of traders net-long is now its lowest since March 20
  • Long positions are 10.7% lower than yesterday and 38.0% lower from last week
  • Short positions are 65.7% higher than yesterday and 130.2% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Kiwi prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current NZD/USD price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in Kiwi retail positioning are impacting trend- Learn more about sentiment!

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex

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David Song , Currency Strategist

David Song
My Picks:  Bullish EUR/USD
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  2 - 10 Days

The March-high (1.1448) remains on the radar for EURUSD following the Federal Reserve interest rate decision as the exchange rate breaks out of the downward trend from earlier this year.

The fresh updates from the Federal Open Market Committee (FOMC) suggest the central bank will insulate the economy from the shift in US trade policy as the “apparent progress on trade turned to greater uncertainty.” In turn, Chairman Jerome Powell and Co. may continue to alter the forward guidance for monetary policy as the Trump administration relies on tariffs and sanctions to push its agenda.

Image of fed fund futures

With that said, the US dollar stands at risk of facing a more bearish fate over the coming months as eight Fed officials project a lower trajectory for the benchmark interest rate while Fed Fund futures reflect a 100% probability for at least a 25bp reduction at the next decision on July 31.

It remains to be seen if the FOMC will reverse the four rate hikes from 2018 as President Donald Trump tweets “we need rates cuts, & easing,” but current market conditions are likely to keep EURUSD afloat as the FOMC appears to be on track to shift gears over the coming months.

EUR/USD Rate Daily Chart

Image of eurusd daily chart

Keep in mind, the broader outlook for EURUSD is no longer tilted to the downside as both price and the Relative Strength Index (RSI) break out of the bearish formations from earlier this year.

In turn, EURUSD stands at risk for a larger correction as it breaks out of the range-bound price action from May following the failed attempt to test the 1.1000 (78.6% expansion) handle, with the exchange rate trading above the 200-Day SMA (1.1350) for the first time since in over a year.

A closing price above the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region brings the Fibonacci overlap around 1.1430 (23.6% expansion) to 1.1450 (50% retracement) on the radar,which lines up with the March-high (1.1448), with the next area of interest coming in around 1.1510 (38.2% expansion) to 1.1520 (23.6% expansion).

Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Additional Trading Resources

For more in-depth analysis, check out the 2Q 2019 Forecast for the Euro

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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Paul Robinson , Currency Strategist

Paul Robinson
My Picks:  USDCAD & EURGBP
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

USDCAD could play out like it’s 2017

The drop off the 2016 high led to a choppy extended rising channel that eventually broke hard in 2017. That break was then followed by another choppy extended rise from the middle of 2017 to early this year. The channel is longer, but still holds that same bearish-looking overlap in price that smacks of a corrective move.

We are seeing USDCAD this week begin declining out of the upward channel, and on that it could soon start to deteriorate in rapid fashion as it did a couple of years ago. There is support not far away via the last low in the channel structure created in January at 13068, and then the trend-line from 2012.

But if things are about to get ugly for the Dollar and we are in fact having a replay of 2017, then those should prove only to be minor speedbumps. Trades in the near-term still have room on the downside to develop before hitting these speedbumps.

Selling rallies and consolidations are a prudent approach to take here over chasing extended down-moves. There is resistance of varying angles (see chart) from 13238 up to near 13300 to watch for signs of stalling upward momentum.

If big-picture forces are to push USDCAD lower, then there should be a few good short-term sets that form along the path of least resistance that could lead to a revisit one day of the 12000 level.

Trading Forecasts and Educational Guides for traders of all experience levels can be found on the DailyFX Trading Guides page.

USDCAD Weekly Chart (ready to breakdown, perhaps 2017-style?)

USDCAD and EURGBP Technical Set-ups, Both Looking Weaker Ahead

USDCAD Daily Chart (watching for bounce/consolidation)

USDCAD and EURGBP Technical Set-ups, Both Looking Weaker Ahead

EURGBP has longer-term resistance, short-term price patterns

EURGBP isn’t a pair I touch much, as it doesn’t seem to offer a lot of great looks from my perspective. However, now is looking like one of those times where it could indeed set up nicely, with a few technical developments taking shape.

For starters, there is a trend-line running down off the 2017 high which brought in the largest group of sellers since rising off the bottom early last month. If the rally today were to falter, we could see a bit of a weekly reversal situation.

Pulling into the 4-hr time-frame, an upward channel structure has kept EURGBP guided higher for the better part of a month, but with selling on Tuesday and Wednesday the bullish pattern was snapped. But to confirm a break of these types of sequences, a decline below the most recent low inside the channel is desired.

A break of that low may be coming soon if a right shoulder of a head-and-shoulders (H&S) pattern forms. A turn down from around current levels and subsequent break of 8871 on a closing 4-hr basis will trigger the H&S pattern (also create a lower-low) and should set into motion a move towards just under 8800, the bottom of the rising channel.

My colleague, Daniel Dubrovsky shares a similar view, check out this piece for his take on EURGBP.

EURGBP Daily Chart (backing off trend-line)

USDCAD and EURGBP Technical Set-ups, Both Looking Weaker Ahead

EURGBP 4-hr Chart (Channel broke, H&S pattern forming)

USDCAD and EURGBP Technical Set-ups, Both Looking Weaker Ahead

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held at 9 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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James Stanley , Currency Strategist

James Stanley
My Picks:  EURUSD, USDCAD, AUDUSD, USDJPY
Expertise:  price action, macro
Average Time Frame of Trades:  few days - few weeks

EURUSD, USDCAD, AUDUSD, USDJPY Talking Points:

  • The US Dollar put in a week of recovery following the prior-week sell-off, with a big area of confluent support helping to hold the lows.
  • Next week will see the US Dollar remain on center-stage for what’s anticipated to be a widely-watched FOMC rate decision. Will the Fed’s dot plot matrix meet the market’s demands for future rate cuts? Below I look at two setups on either side of this theme.

US Dollar Recovers from Confluent Support Ahead of FOMC

The US Dollar put in another interesting week but in stark contrast to the first week of June, prices rallied for much of the period. While the prior sell-off was being driven by lower rate expectations around the Federal Reserve, a re-ascension towards the highs in US equities combined with some not-that-bad inflation data and a strong retail sales report brings that theme into question. And while next week may not bring that move out of the Fed that’s been getting priced-in, the big question is whether the bank’s forecasts will show the three full rate cuts by the end of 2019 that markets have begun to price-in.

Last Friday saw the Dollar plummet to a key area on the chart after the release of Non-Farm Payrolls. The price of 96.47 is a Fibonacci level, and this was confluent with the 200-day moving average. That support has since held the lows, and this week saw buyers come back, particularly on Friday on the heels of a better-than-expected retail sales report. This sets the stage for what’s expected to be a very interesting week on the economic calendar with the Federal Reserve set to announce their June rate decision on Wednesday.

US Dollar Daily Price Chart

us dollar usd daily price chart

Chart prepared by James Stanley

EURUSD: Welcome Back, 1.1212

Perhaps most noticeable around the US Dollar’s sell-off last week was strength in EURUSD. Other major pairs remained more subdued, such as GBPUSD or AUDUSD, which had actually already started to turn-lower. But in EURUSD, as the Dollar pushed-lower buyers bid the pair up to fresh two-month-highs. And while this move may have been sourced from more of a short-squeeze than a legitimate ramp of positive enthusiasm, the case remains that the topside of EURUSD may be attractive should USD-bears continue to push.

For this week, I wanted to see a pullback to the support zone that runs from 1.1248-1.1265. Friday saw prices cut right through that zone without much of a show from buyers, and a deeper zone soon came into play. This is an area on the chart that I’ve been looking at in these pieces for almost eight months now; coming back into play last November as the sell-off in the pair found support. For next week, a hold above the 1.1187 Fibonacci level keeps the door open for topside strategies, targeting an initial move towards 1.1248-1.1265, after which secondary targets could be addressed around the 1.1325 level that functioned as the April swing-high. Beyond that, resistance from the longer-term range comes into play in the region that runs from 1.1448-1.1500.

EURUSD Daily Price Chart

eur usd eurusd eur/usd price chart

Chart prepared by James Stanley

USDCAD Bounces From Two-Month Lows, Can Bulls Continue to Push?

Last week I had looked at the long side of USDCAD, largely basing the setup off of a hold of two-month-lows around the 1.3250 psychological level. And after a bit of grind to start the week, the pair perked-up, gaining approximately 175 pips and running into a Fibonacci level at 1.3423. This move helped to invalidate potential short-side themes, and with prices working back into the prior range, there may be more room to go, particularly if USD-strength comes back as a dominant theme next week.

USDCAD Eight-Hour Price Chart

usd cad usdcad usd/cad price chart

Chart prepared by James Stanley

I had looked into USDCAD again earlier this morning, attempting to use a prior zone of support as fresh resistance for lower-high potential. That did not come into play, as buyers just continued to push beyond that area on the chart, eventually finding a bit of resistance at the 1.3423 Fibonacci level. The pace with which those gains priced-in, combined with the area on the chart in which they showed up makes the bearish case less attractive and, instead, can keep the door open for topside approaches in the pair.

For next week, a pullback to support in the zone that runs from 1.3361-1.3385 can keep the door open for bulls. Topside target potential exists at current resistance around 1.3423, followed by the 1.3475 area after which ‘big picture’ resistance comes into play around 1.3525.

USDCAD Four-Hour Price Chart

usd cad usdcad usd/cad price chart

Chart prepared by James Stanley

AUDUSD Down to Fresh Five-Month-Lows

I had looked at bearish setups in AUDUSD last week in the effort of getting some long-USD exposure on the radar. The pair has since pushed down to fresh five-month-lows, and this can keep the door open for more. The primary challenge at the moment is chasing what may be an oversold move, so rather than selling and hoping, a pullback to resistance at prior support may be a more prudent manner of approach. For such a theme there are a couple of nearby areas of interest. The prior zone of support that ran from .6900-.6911 appears especially interesting as this showed a couple of different doses of support but, as yet, hasn’t functioned as resistance. Beyond that, the .6955-.6960 area could be another potential point of resistance should sellers take a step back.

AUDUSD Four-Hour Price Chart

aud usd audusd aud/usd price chart

Chart prepared by James Stanley

USDJPY Holds Key Resistance Even as Risk Aversion Remains at Bay

Also on the short-side of the US Dollar is a potential setup in USDJPY. I had looked at this one last week with a focus on resistance potential around 108.70. And while that price helped to hold the highs, sellers weren’t able to make much of a mark and price action has trickled-back into this zone. If risk aversion themes do come back, which is certainly a possibility considering next week’s calendar – the short-side of USDJPY can remain of interest down to the 107.00 area. For next week, a hold below this 109.00 level keeps the door open for short-side strategies. Of note, a Bank of Japan rate decision is also on the docket for next week, so both sides of this pair’s respective economies will be in the spotlight and this can keep USDJPY price action on the move.

USDJPY Eight-Hour Price Chart

usd jpy usdjpy usd/jpy price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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Michael Boutros , Technical Strategist

Michael Boutros
My Picks:  Near-term Trade Setups in USD/CAD and EUR/USD
Expertise:  Technical
Average Time Frame of Trades:  1-3 Days

Review this week's Strategy Webinar for an in-depth breakdown of this setup and more.

USD/CAD Price Chart - Loonie 120min

USD/CAD Price Chart - Loonie 120min - US Dollar vs Canadian Dollar

In this week’s Canadian Dollar Price Outlook we noted that the Loonie, “breakdown has price testing the first major support pivot (1.3258) and while the broader outlook remains weighted to the downside, we could see some price exhaustion here…Look for price exhaustion into the upper parallels for possible entries with a break of the lows targeting more significant support into the 1.32-handle."

USD/CAD rallied off that mark this week with the advance now targeting confluence resistance at 1.3357/63- a region defined by the median-line of the descending pitchfork formation extending off the May highs, the 38.2% retracement of recent sell-off, the May swing low and near-term up-channel resistance. Looking for failure / exhaustion heading into this zone with a break below channel support targeting weekly open support at 1.3238 and the 61.8% extension / lower parallel at ~1.32.

New to Forex? Get started with our Beginners Trading Guide!

USD/CAD Trader Sentiment

USD/CAD Trader Sentiment - US Dollar vs Canadian Dollar Price Chart - Loonie Positioning
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.12 (47.2% of traders are long) – neutral reading
  • Long positions are 14.5% lower than yesterday and unchanged from last week
  • Short positions are 3.2% higher than yesterday and 9.0% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Traders are further net-short than yesterday & last week, and the combination of current positioning and recent changes gives us a USD/CAD-bullish contrarian trading bias from a sentiment standpoint.

See how shifts in Loonie retail positioning are impacting trend- Learn more about sentiment!

EUR/USD Price Chart - Euro 120min

EUR/USD Price Chart - Euro 120min

I highlighted this ascending pitchfork formation in this week’s Euro Price Outlook while noting that the immediate risk was for a pullback towards the lower parallel. The pullback broke below confluence support at 1.1286 today and leaves price vulnerable to further losses near-term. That said, I’m on the lookout for downside exhaustion / long-entries heading into the 1.1250/56 support zone- a region defined by the Friday swing-low and the 38.2% retracement of the late-May advance.

Interim resistance stands at the 61.8% retracement / weekly open at 1.1317/21 with a breach of the highs keeping the 1.1374 & 1.1393 resistance targets in view. Review my latest EUR/USD Weekly Price Outlook for a look at the longer-term Euro technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

-Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex

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David Song , Currency Strategist

David Song
My Picks:  Bullish EUR/USD
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  2 - 10 Days

EURUSD struggles to retain the advance following the European Central Bank (ECB) meeting, but recent price action raises the risk for a larger correction as the exchange rate breaks out of the bearish trend from earlier this year.

It seems as though the ECB will keep monetary policy on auto-pilot as the central bank prepares to launch another round of Targeted Long-Term Refinance Operations (TLTRO), and the Governing Council may largely endorse a wait-and-see approach at the next meeting on July 25 as President Mario Draghi is scheduled to step down at the end of October.

In turn, attention turns to the Federal Reserve as the central bank is slated to update the Summary of Economic Projections (SEP), and a material adjustment in the forward guidance for monetary policy is likely to influence the near-term outlook for EURUSD as market participants prepare for a change in regime.

Image of Fed Fund futures

The Federal Open Market Committee (FOMC) faces a growing dilemma as President Donald Trump tweets that “the Fed interest rate way too high, and the central bank may ultimately show a greater willingness to switch gears later this year as the Trump administration relies on tariffs to push its agenda.

In response, Chairman Jerome Powell and Co. may project a lower trajectory for the benchmark interest rate, with the US Dollar at risk of facing a more bearish fate over the near-term as Fed Fund futures may continue to show a greater than 90% probability for a September rate cut.

EUR/USD Rate Daily Chart

Image of eurusd daily chart

The broader outlook for EURUSD is no longer tilted to the downside as both price and the Relative Strength Index (RSI) break out of the bearish formations from earlier this year.

With that said, EURUSD stands at risk for a larger correction as the exchange rate breaks out of the range-bound price action from May and holds above the Fibonacci overlap around 1.1270 (50% expansion) to 1.1290 (61.8% expansion).

Waiting for a close above 1.1340 (38.2% expansion) to bring the 1.1390 (61.8% retracement) to 1.1400 (50% expansion) region on the radar, with the next area of interest coming in around 1.1430 (23.6% expansion) to 1.1450 (50% retracement), which lines up with the March-high (1.1448).

Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Additional Trading Resources

For more in-depth analysis, check out the 2Q 2019 Forecast for the Euro

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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David Cottle , Analyst

David Cottle
My Picks:  Long NZD/USD
Expertise:  Fundamental and Technical
Average Time Frame of Trades:  One Month

Currency Pair: Bullish NZD/USD

Expertise: Fundamental and Technical

Average Time Frame: One Month

New DailyFX Quarterly Forecasts for Q3 and are available here

After a strong run higher into last week the New Zealand Dollar has wilted somewhat on its daily chart but there is scope for hope that the year’s long downtrend will not be resumed.

Most of the recent price action would appear to have a lot to do with the ‘USD’ side of NZD/USD and rather less to do with the local currency. Suspicions that US interest rates may yet go lower knocked the US Dollar and raised risk appetite to the Kiwi’s benefit.

However, in the last couple of days softer trade rhetoric from Washington toward Beijing has seen the US Dollar creep higher. Of course, trade headlines are a real unpredictable lottery for currency investors and others but, if the world is really headed towards more monetary accommodation the New Zealand Dollar should find itself well underpinned.

Such backdrops always result in a ‘hunt for yield’ and the currency still offers it. Its key Official Cash Rate may be at a record low of 1.50%- and expected to go lower- but that will still probably leave the New Zealand Dollar offering better yields than most developed market peers and a triple-A credit rating to boot.

Technically speaking NZD/USD is headed back towards the downtrend line which capped trade from late March until the start of June. It may even get there and slide back into a support zone defined on the top by the 6357 region, which capped trade between mid-May and early June, and at base by this year’s low.

NZD Slips Could Be Worth Buying Against Macro Risk Backdrop

However, for as long as markets suspect that the Fed will be more accommodative in the weeks and months ahead, the New Zealand Dollar is likely to retain a stronger underpinning than it has had for much of this year. The recent peak of 0.6680 should be reachable again at the very least, with consolidation around that region and a push higher very possible if stronger risk appetite remains clear.

The Australian Dollar will also benefit in much the same way, probably, but, with more near-term rate hikes priced into its forward curve than New Zealand’s, the Kiwi might get more support.

Resources for Traders

Join a free Q&A Webinar and have your trading questions answered

Find out how AUD is viewed by the trading community in real time at the DailyFX Sentiment Page

Strategy not working? Here’s the number one mistake traders make

Just getting started? Check out the DailyFX Beginners’ Guide.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!

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James Stanley , Currency Strategist

James Stanley
My Picks:  EURUSD, AUDUSD, USDCAD, USDJPY
Expertise:  price action, macro
Average Time Frame of Trades:  few days - few weeks

EURUSD, AUDUSD, USDCAD and USDJPY Talking Points:

  • It was a brutal week in the US Dollar as bears began to take control, opening the door for the initiation of fresh longer-term bearish themes. The degree with which that weakness priced-in across various currency pairs can be helpful for staging strategy for next week.
  • The US Dollar has caught support at a key Fibonacci level around 96.47, and in this article I look at a pair of setups on either side of the Greenback.
  • DailyFX Forecasts are published on a variety of currencies such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

US Dollar Bears Take Control

It was a brutal week in the US Dollar. Just last Thursday, the US Dollar made a fast move towards the two-year-high, falling short before sellers came into play last Friday. That bearish theme has continued, with aggression, throughout this week as a couple of different items pointed in the same direction. Jerome Powell offered some dovish commentary on Tuesday, and on Friday, a disappointing NFP release helped to further the bearish theme.

At this point, the US Dollar is sitting at fresh two-month-lows and next week brings the potential for more. But, with that said, the currency is oversold from a number of metrics, and this could present a backdrop in which the USD is due for a bit of a bounce, even if only temporary. Below, I look at two setups on either side of the US Dollar, looking to capitalize on whichever theme ends up taking over after this recent ramp of volatility.

US Dollar Weekly Price Chart

us dollar usd weekly price chart

Chart prepared by James Stanley

Bullish EURUSD on Hold Above 1.1250

Going along with that USD sell-off this week has been a bullish theme in EURUSD. That bullish theme has shown up despite the brewing risks around the Euro-Zone and the continued pace of dovishness at the ECB. But – those items aren’t necessarily new, whereas this re-pricing of US rate expectations is; keeping the door open for an extension of further gains in EURUSD.

EURUSD broke above a bearish trend-line this morning and is currently sitting at fresh two-month-highs. So, this may not be the most operable area to chase the pair-higher at the moment. But, a pullback to support, with respect of the pre-NFP swing-low around 1.1250 keeps the door open for further topside in the pair. This can expose a run up towards the prior zone of range resistance that runs from 1.1448-1.1500.

EURUSD Eight-Hour Price Chart

FX Price Action Setups in EUR/USD, AUD/USD, USD/CAD and USD/JPY

Chart prepared by James Stanley

Bearish AUDUSD on Hold Below .7070

This week brought the peculiar scenario of a ‘rate cut rally’ in the Aussie, as the pair rallied up to fresh near-term-highs as the RBA cut rates to a record low of 125 basis points. This, of course, is due to the plunge in the US Dollar over the past week which similar to the scenario in the Euro above, comes from the fact that something ‘new’ is getting priced-in around USD while the harboring pessimism around the Aussie has been here for some time.

The big question is whether this week’s move in AUDUSD has more room to run and, if it doesn’t, this could be an interesting area to start following for reversal potential. Prices are currently testing a zone looked at for resistance earlier this week that runs from .7000-.7019. If price action remains below the May swing-highs after next week’s open, the potential for short-side reversal strategies can begin to get more attractive. This can allow for a more down towards .6960 with secondary target potential around last week’s support, taken from the .6900-.6910 area on the chart.

AUDUSD Four-Hour Price Chart

audusd aud usd price chart

Chart prepared by James Stanley

Bullish USDCAD on Hold Above 1.3250

It’s been a stark turnaround in themes around USDCAD. The pair broke-out to fresh five month highs just last week following the Bank of Canada rate decision. That move topped-out at the 1.3565 area, and since then bears have come back, with aggression, to push prices down to fresh monthly lows.

But USDCAD is testing a previously key area of support, taken from the 1.3250-1.3300 area on the charts, and if buyers are able to hold the lows above the psychological level around 1.3250 after next week’s open, the potential for reversal strategies can become more attractive. This can allow for target potential around the 1.3300 handle, followed by the 1.3361 level that temporarily helped to hold support earlier this week.

USDCAD Daily Price Chart

usdcad usd cad price chart

Chart prepared by James Stanley

Bearish USDJPY on Hold Below 108.70

Above are a series of reversal scenarios or contrarian themes, largely looking for the risk aversion theme that showed-up in May to continue to dissipate after Chair Powell’s comments earlier this week. But – the potential for risk aversion does remain, and traders would be remiss if they didn’t at least consider the possibility of continued volatility expansion given the way that the month of May panned out.

In the FX-world, few currencies are as attractive in themes of risk aversion as the Japanese Yen. As looked at in Thursday’s webinar, the USDJPY pair has already experienced a volatile 2019, with a significant surge of Yen-strength after the open of the New Year slowly dissipating until, eventually, risk aversion came roaring back in early-May.

This week’s resistance showed-up at a key area on the chart, similar to what happened last week; and this continues a pattern of lower-lows and lower-highs in the pair that’s now more than a month old. If sellers are able to hold resistance inside of the 108.70 area on the chart, the door can open for bearish continuation down to the next Fibonacci level from a sequence that’s provided a number of inflections already in 2019. That level runs around the 107.00 handle, and tarders can look at tighter targets and potentially break-even stop moves on a test of the 107.50 psychological level.

USDJPY Eight-Hour Price Chart

usdjpy usd jpy eight hour price chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as USD/CAD, EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

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DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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Paul Robinson , Currency Strategist

Paul Robinson
My Picks:  EURUSD & USDCAD
Expertise:  Technical
Average Time Frame of Trades:  Several days to several weeks

EURUSD rejected after trend-line breaks

The Euro was posting a solid day yesterday, trading above the trend-lines from February and September of last year as well as highs carved out last month, before turning lower to close near the lows of the session. This turnabout carved out a strong rejection candlestick, shifting focus lower.

Looking to the downside, with the way EURUSD has been trading for months now, a big down-move may not be in store but the near-term trading bias as long as yesterday’s high at 11306 is not breached, is now negative. Range conditions could persist which means the area just above 11100 could once again act as a solid floor.

However, risk is still skewed in favor of a downside breakout developing at some point given broader trend forces in place since the 2018 high. A breakdown below 11000 is seen as needed to get the Euro rolling downhill towards an eventual target of 10724, the April 2017 gap from the French election.

Trading Forecasts and Educational Guides for traders of all experience levels can be found on the DailyFX Trading Guides page.

EURUSD Daily Chart (Big rejection at resistance)

EURUSD and USDCAD Reversal Days at Key Levels Shift Trading Bias’

USDCAD turns off 17-mo t-line, bottom of range

USDCAD has been no easy handle with it lacking direction for weeks on end, but that doesn’t mean there aren’t trading opportunities still out there in the pair. Yesterday, we saw price rejected at the bottom of the recent multi-week trading range, which is in confluence with the trend-line from the end of January 2018.

It wasn’t a strong rejection like the one seen in EURUSD, but nevertheless it showed a willingness by buyers to show up at support. Barring a breakdown below 13362, yesterday’s low, look for USDCAD to try and trade back to the high end of the recent trading range, Jan ’16 trend-line, right around the 13500-mark.

Bigger picture forces still remain tentatively to the upside and as such an upside breakout could eventually develop, but traders will want to keep persistent range conditions in mind. On the flip-side, a breakdown below the 2018 trend-line would be considered a materially bearish event should such a break get separation. This will be discussed later should it become relevant.

USDCAD Daily Chart (rejected at support)

EURUSD and USDCAD Reversal Days at Key Levels Shift Trading Bias’

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held at 9 GMT on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday each week for the Becoming a Better Trader webinar series.

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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Peter Hanks , Junior Analyst

Peter Hanks
My Picks:  Bullish USDCAD
Expertise:  Fundamental and Technical Analysis
Average Time Frame of Trades:  One to Three Weeks

USDCAD Price Outlook:

USDCAD to Rise Should Canadian Dollar Fret Crude Oil Prices

A series of dovish remarks from Federal Reserve officials have pressured the US Dollar in recent days, sending it lower versus its Canadian counterpart. The chances of a rate cut by year-end have soared, with some analysts pricing in up to three by early 2020. Still, the Federal Reserve is not alone in its dovishness. This week the Bank of Australia cut its interest rate and last week the Bank of Canada struck a rather dovish tone at their own rate meeting.

That said, it seems like a race to the bottom for central banks and their respective interest rates – a theme that could bolster the US Dollar as it looks to enjoy a sort of “best of a bad situation” bonus. Aside from monetary policy, the Greenback may enjoy a tailwind versus the Canadian Dollar from the continued deterioration in the price of crude oil. As a large factor of the Canadian economy, the commodity’s plummet to $50 does not bode well for growth outlooks and CAD strength.

USDCAD Price Chart: Daily Time Frame (October 2018 – June 2019) (Chart 1)

USDCAD price chart outlook

From a technical perspective, USDCAD boasts a confluence of nearby support - first provided by two Fib levels around 1.3374 and the 100-day moving average. Secondarily, the pair will look to the 200-day moving average and an ascending trendline of support from January 2018 – a line which has not been broken since inception.

With that in mind, invalidation levels for a bullish USDCAD position exist underneath the trendline and the subsequent Fib level - near the 3-month low of 1.3250. Given that the premise of the trade is based on long-term Dollar strength continuing, a break beneath 1.3250 would seriously dent the trade’s outlook.

Interested in how other traders are positioned on USDCAD? Check out our Free IG Client Sentiment Data.

Above current price action, several interesting levels remain for topside target potential. The March swing-high around 1.3465 could be looked to as an initial target. Beyond 1.3465, the ascending trendline marking the tops in each of March, April and May. Initial areas of confirmation are therefore around 1.3500 – a level that posed considerable resistance throughout the month of May. As price action unfolds and the trade progresses, follow @PeterHanksFX on Twitter for updates and technical levels.

USDCAD price chart outlook trader

Finally, IG Client Sentiment Data reveals that traders remain net-short USDCAD. Since we typically use retail trader positioning as a contrarian indicator at DailyFX, it suggests prices may continue to rise – but the signal has weakened with bearish traders pouring out of the pair and net-positioning approaches parity. Find out what this may mean for the trade, how to incorporate this tool into your own strategy with my Client Sentiment Walkthrough Webinar.

Read more: Oil Prices Extend Losing Streak on GDP Cuts, Inventory Build

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Yen are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

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