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

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

James Stanley, Senior Strategist

US Dollar Talking Points:

  • The US Dollar is starting the week with a bounce from a key support zone.
  • This follows last week’s pullback, that started around inflation data but hastened on Friday after the release of consumer sentiment numbers.
  • 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.

The US Dollar has finally found some element of support after the pullback that developed last week. Prices in DXY had pushed up for a test of the four-month-high ahead of the release of July inflation numbers. And once again, inflation came out well above the Fed’s 2% target. But, the beat on the expected number was milder than prior months, leading to the hope that some of the recent inflationary flare was/is transitory in nature. And prices in USD pulled back after another 5% inflation print, likely due to some relative cooling in the print’s release v/s the expectation.

In USD, prices initially pulled back to the zone around 92.89 and after a mild bounce, sellers drove down to another big area of support around 92.46 on DXY. In this area are two different Fibonacci retracements: The 23.6% retracement of the 2020 sell-off and also the 23.6% retracement of the Q1 bullish trend.

To learn more about Fibonacci, check out DailyFX Education

US Dollar Four-Hour Price Chart

US Dollar Four Hour Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD Bounce from Long-Term Range Support

That pullback in USD came at a very opportune time for EUR/USD: Right as the pair was testing its 2021 low at 1.1704. Around that low are a series of Fibonacci levels that have, so far, put in a strong sense of range support in the major pair through this year’s trade.

EUR/USD Daily Price Chart

EURUSD Daily Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

Last week’s bounce pushed the pair up to another Fibonacci level of note, with the 14.4% retracement of the 2021 trend plotted at 1.1797 catch the recent high.

But, there may be some bullish trajectory yet as the four chart below illustrates a sequence of recent higher-highs and lows. The psychological level at 1.1750 is of interest for higher-low support potential. Perhaps more enticing to longer-term bearish scenarios is resistance potential around the 1.1850 area; and if that can’t hold, the prior resistance zone from 1.1885-1.1900 remains of interest.

To learn more about psychological levels, check out DailyFX Education

EUR/USD Four-Hour Price Chart

EURUSD Four Hour Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

GBP/USD: Held Back at Key Fib – Breakout Potential

On the short side of the US Dollar, GBP/USD remains attractive. The key point of emphasis at the moment appears to be the same Fibonacci level that’s been in-play since back in February, and this is the 23.6% retracement of the September-June major move.

More recently, GBP/USD formed a falling wedge formation, which is often approached with the aim of bullish breakouts. And prices did break out last week – but they didn’t get very far as Fibonacci resistance came into play to hold the advance. This happened again after this week’s open.

This keeps the door open for bullish breakout potential at that level of 1.3879 in GBP/USD.

To learn more about the falling wedge formation, check out DailyFX Education

GBP/USD Four-Hour Price Chart

GBPUSD Four Hour Price Chart

Chart prepared by James Stanley; GBPUSD on Tradingview

USD/CAD Holds at a Big Spot

Canadian inflation numbers are released on Wednesday so we’ll likely see USD/CAD stay on the move. Of late, the pair has held up through a key support test at a really big spot on the chart around 1.2500. But, there’s also a trendline that was confluent with that price and, so far, that zone has held.

To learn more about drawing and using trendlines, check out DailyFX Education

Short-term price action is now nearing a test of near-term range resistance, plotting at around 1.2588. A breach above that opens the door to the next near-term level at 1.2622, a longer-term Fibonacci level that’s marking the topside of the longer-term support zone.

USD/CAD Four-Hour Price Chart

USDCAD Four Hour Price Chart

Chart prepared by James Stanley; USDCAD 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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