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US Dollar Price Action Setups: EUR/USD, GBP/USD

US Dollar Price Action Setups: EUR/USD, GBP/USD

James Stanley, Senior Strategist

US Dollar, EUR/USD, GBP/USD Talking Points:

  • The US Dollar is holding support near a key spot on the chart.
  • This zone of confluent support turned around a stark sell-off in early-September.
  • EUR/USD has built into a fairly consistent range, and GBP/USD may be threatening a topside breakout.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
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The US Dollar continues to hold near an area of long-term support and this was the same zone that had come into play in early-September to turn around the USD sell-off that had started in March.

This area offers a few different mechanisms of support to create this confluent zone, with a trendline projection plotted from the 2011-2014 lows coming back into view again this morning. Also of interest from the monthly chart: At this point there’s a not-yet-complete evening star formation brewing, accented by September’s strength running into resistance in October, which led to the build of a hammer formation. So far through the first half of November we’ve seen more than half of the bullish move in September taken-out; and if USD does close the month with a confirmed evening star – that can keep the door open for a deeper bearish move into the end of 2020 and at some point in 2021.

Should this confluent support give way – the next big item looks to be around the 91.00 handle, after which the psychological level of 90 comes into view followed by 88.25, which is the 50% marker of the 2011-2017 major move as well as the current six year low.

To learn more about hammers or evening star formations, join us in DailyFX Education

US Dollar Monthly Price Chart

US Dollar Monthly Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD Remains in Range

Despite all of the fireworks in the headlines over the past few months, EUR/USD has built into a fairly consistent range between 1.1600 and 1.1900. The big question is whether the ECB is going to unleash a bazooka of stimulus at their December meeting; and while many market participants are expecting an announcement of some sort, questions abound about how large any program may be.

The big item on the docket for this week out of Europe is the inflation print to be released on Wednesday morning.

EUR Forecast
EUR Forecast
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EUR/USD Eight-Hour Price Chart

EURUSD Eight Hour Price Chart

Chart prepared by James Stanley; EUR/USD on Tradingview

Cable (GBP/USD) Catches Resistance, but Bulls Persist

GBP/USD has similar seen strength through much of November to go along with a really weak US Dollar. The pair ran into a big zone of resistance last week from 1.3250-1.3275. That resistance check led-in to a quick pullback, but so far this week buyers have persisted to keep the short-term trend running higher.

This gives the allusion of a possible re-test of that resistance zone, and given the rising trendline sitting underneath price action, there may be scope for bullish breakout potential. The UK releases inflation numbers on Wednesday morning, a few hours ahead of the European release, and this looks to be the main item of excitement for GBP/USD on this week’s economic calendar.

GBP/USD Bullish
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -4% -2% -3%
Weekly -9% 15% 4%
Current retail sentiment in GBP/USD
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GBP/USD Four-Hour Price Chart

GBPUSD Four Hour Price Chart

Chart prepared by James Stanley; GBP/USD on Tradingview

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

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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