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

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

James Stanley, Senior Strategist

US Dollar Talking Points:

  • The US Dollar pushed back down to the 90.00 level after the release of Non-farm Payrolls.
  • It was another disappointing NFP release out of the US, and this pushes the focus to the Federal Reserve’s next policy meeting on June 15-16, and this should be a big Fed meeting as it’s a quarterly meeting that brings updated forecasts and guidance.
  • 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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It was another disappointing NFP release out of the United States and this seemingly removes a bit of pressure from the Federal Reserve just a couple of weeks ahead of a really big meeting.

The tension is driven by just how ‘transitory’ inflation might be. In Q1, market participants started getting worked up as observations of markets like Lumber or Copper brought along inflationary fears. US Treasury rates started to move up in response, and then in April and May, inflation stats started to show some pretty large jumps.

So the big question is whether those inflation prints have done anything to compel the Fed into a faster timeline for policy normalization, and this morning’s NFP print is but another item in the camp of calm.

But – make no mistake, this topic is far from decided. And with how heavily USD bears hit the currency in the first two months of Q2, the possibility does remain for some USD-strength as we move towards that next key FOMC rate decision.

The weekly chart below provides some context, as the past few weeks have seen a hold of support at a really key zone. This is the same area of prices that came into play to hold the lows in early-January, ahead of the Q1 rally that met its demise on the final day of last quarter.

US Dollar Weekly Price Chart

US Dollar Weekly Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

Taking a further step back highlights the bearish potential of the matter. This was the same chart that I had used in the Q2 technical forecast for the USD. But this also helps to categorize last quarter’s strength as a corrective move in terms of a bigger-picture sell-off.

US Dollar Monthly Price Chart

US Dollar Monthly Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD Returns to Range

As USD-strength showed ahead of NFP, EUR/USD dipped below a big spot of support that had helped to hold the lows over the past couple of weeks. This zone comes in around a couple of longer-term Fibonacci levels spanning 1.2134-1.2167.

After NFP printed and the Dollar began to tank, EUR/USD jumped back above this support zone and, as of this writing, is grasping on the top of the zone around 1.2167. The key here will be watching for a hold of that Friday low through Monday trade, at which point the potential remains for prices to go back into range ahead of that FOMC rate decision. The Friday low is just above the 1.2100 handle, but bonus points if the Monday low can remain above the 1.2134 Fibonacci level, which would amount to a short-term higher-low.

EUR/USD Four-Hour Price Chart

EURUSD Four Hour Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

GBP/USD Holds Support, Range Remains

GBP/USD remains interesting, as well. I had covered this in the Wednesday webinar, looking at the similarities between Cable and EUR/USD.

Pre-NFP price action was key here. Because while EUR/USD pushed down to a fresh lower-low, GBP/USD held strong around the 1.4100 support. Range resistance is closer, but there’s also topside breakout potential as I had discussed in that same Wednesday webinar.

For GBP/USD, a hold above the Friday low through Monday trade similarly keeps the door open for bullish scenarios in the pair, making for perhaps an even more enticing backdrop than what’s showing in EUR/USD.

GBP/USD Four-Hour Price Chart

GBPUSD Four Hour Price Chart

Chart prepared by James Stanley; GBPUSD on Tradingview

USD/CAD Sellers Still Showing Fatigue

USD/CAD was one of my favored bearish USD setups for some time, sparked by the BoC announcement in April in looking ahead towards post-pandemic policy. This exposed CAD to some aggressive strength and, when married up with a USD backed by a Fed that’s so far refused to do the same, prices in the pair plummeted to a fresh six-year-low.

But as I had warned of at the open of last week, sellers were starting to show fatigue and a big spot for a possible about face was showing up on the chart. This is the 1.2000 psychological level, which nearly came into play this week had sellers not stopped short by a couple of pips. This happened after another resistance visit at the ‘r1’ level I had highlighted; but that lower-high now opens the door to short-term topside breakout potential at that same 1.2143 area.

The bigger question in USD/CAD is what happens after buyers are able to elicit a bullish breakout? Will sellers pounce in anticipation of a 1.2000 revisit? Or will sellers continue to show shyness, allowing for a combination of reversal strategies and short squeezes to deepen the retracement.

To learn more about psychological levels, check out DailyFX Education

USD/CAD Four-Hour Price Chart

USDCAD Four Hour Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

AUD/USD for USD-Strength Scenarios

One area that may remain as interesting in the event of a prolonged run of USD-strength is AUD/USD. The pair had spent most of the past six weeks in a range until this week saw price action push down to a fresh monthly low. Similar to EUR/USD above, the NFP volatility helped the pair to push back above support, and prices are currently grasping on to this zone. But, the difference between this and EUR/USD was the prevailing trend, and that can help to keep AUD/USD as a candidate for bullish USD-strength scenarios in the lead-up to the June FOMC rate decision.

AUD/USD Four-Hour Price Chart

AUDUSD Four Hour Price Chart

Chart prepared by James Stanley; AUDUSD on Tradingview

--- Written by James Stanley, Senior 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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