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US Dollar Technical Setups: DXY, USD/CAD & GBP/USD Levels

US Dollar Technical Setups: DXY, USD/CAD & GBP/USD Levels

Michael Boutros, Strategist

Near-term Technical Outlook: Setups on EUR/USD, AUD/USD & USD/CAD

  • Updated charts on technicals setups we’ve been tracking in DXY, USD/CAD & GBP/USD
  • Sterling stalling into resistance
  • Loonie signals exhaustion after four-weeks
  • DXY reprieve could be short-lived
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An update on technical setups we've been tracking inthe US Dollar Index, the Canadian Dollar and Sterling. These are the targets and invalidation levels that matter heading into the close of the week.Review my latest Strategy Webinar for an in-depth breakdown of thesetechnical setups and more.

Sterling Price Chart – GBP/USD 120min

Sterling Price Chart - GBP/USD 120min - British Pound vs US Dollar Trade Outlook - Cable Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; GBP/USD on Tradingview

In my last Sterling Price Outlook we highlighted that the GBP/USD breakout was, “testing a critical resistance confluence at 1.3805/32 – a region defined by the 78.6% Fibonacci retracement of the September decline, the 100-day moving average and the 100% extension of the ascent off the September low.” That level has continued to govern the highs into Thursday and the focus is on inflection off this zone.

Bottom line: Out outlook remains unchanged- while the risk remains for a near-term pullback, the broader focus remains higher while above the yearly open a 1.3646 with a topside breach above the September high-close at 1.3865 still needed to fuel the next leg higher in price. Review my latest Sterling Weekly Price Outlook for a look at the longer-term GBP/USD technical trade levels.

Sterling Trader Sentiment – GBP/USD Price Chart

Sterling Trader Sentiment - GBP/USD Price Chart - British Pound vs US Dollar Retail Positioning - Cable Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short GBP/USD - the ratio stands at -1.22 (45.07% of traders are long) – weak bullish reading
  • Long positions are6.71% lower than yesterday and 6.77% lower from last week
  • Short positions are 7.73% higher than yesterday and 2.43% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias from a sentiment standpoint.

Canadian Dollar Price Chart - USD/CAD Daily

Canadian Dollar Price Chart - USD/CAD Daily - Loonie Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

In today’s Canadian Dollar Technical Price Outlook we noted that USD/CAD was testing key downtrend support with the risk for near-term exhaustion into the close of the week. Just a few hours later, and price is already threatening and outside-day reversal off the lows- the last four instances have produced significant reversals, the most recent of which was a 1.44% rally back in September. Is this a similar play in the making? Watch the close of today’s session.

Bottom line: Threat for a near-term correction with the immediate focus on this USD/CAD recovery off support. Review my latest Canadian Dollar Weekly Price Outlook for a look at the longer-term Loonie technical trade levels.

US Dollar Index Price Chart – DXY DailyChart

US Dollar Index Price Chart - DXY Daily - USD Trade Outlook - Technical Forecast

Prepared by Michael Boutros, Technical Strategist; US Dollar Index on Tradingview

In my latest US Dollar Price Outlook we noted that a break in the monthly opening-range lows in DXY threatened a deeper correction with the focus on key support into 93.36/45- a region defined by the 100% extension of the most recent decline and the November / August high-day closes. Price registered a low at 93.49 today before rebounding – is this a near-term exhaustion?

Bottom line: The threat for a deeper correction remains while below the median-line (currently ~94)- look for a stronger inflection on a test of key support IF reached. Review my latest US Dollar Weekly Price Outlook for a closer look at the longer-term DXY technical trading 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, Technical Strategist with DailyFX

Twitter @MBForex

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

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