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US Dollar Price Action Setups Post-CPI: EUR/USD, GBP/USD, AUD/USD

US Dollar Price Action Setups Post-CPI: EUR/USD, GBP/USD, AUD/USD

James Stanley, Senior Strategist

US Dollar Talking Points:

  • The US Dollar pulled back from the massive bullish trend that sparked in early-March.
  • Next week brings the FOMC rate decision that many have been waiting for, with the Fed finally expected to begin lifting rates. But a 25 basis point hike is already priced-in, so what else the bank has to say will likely be the next major push point for the USD.
  • This morning brought yet another strong inflation print with headline at 7.9% and core at 6.4%.
  • 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 started to cool after an aggressive topside run brought in fresh yearly highs earlier this week. As looked at on Monday, there’s a combination of factors pushing the bid in the USD, key of which has been the expectation for the Federal Reserve to shift into a hawkish mode at next week’s FOMC rate decision. But, there’s also been a war bid of recent that’s helped to push some additional topside, especially with weakness showing in the Euro given the close proximity of the conflict.

From the weekly chart, the trend remains aggressively strong in the USD, with Monday showing a bit of resistance from a channel that’s been in-play for close to a year now.

US Dollar Weekly Price Chart

US Dollar Weekly chart

Chart prepared by James Stanley; USD, DXY on Tradingview

On Monday I looked at a major zone of support in the US Dollar spanning from Fibonacci levels at 97.72 up to 97.87. This zone started to come into play yesterday morning and there was another test there this morning, with prices pushing down to the bottom of the zone around the ECB rate decision.

That led to a strong reaction that could be pointing to bullish continuation potential.

US Dollar Four-Hour Price Chart

US Dollar four hour price chart

Chart prepared by James Stanley; USD, DXY on Tradingview

USD Short-Term

At this point we’re still in the immediate aftermath of the ECB so price action could still be jumpy through the European close, but for bulls to show their hand a push up to the short-term resistance of 98.32 could be a key indication. The next level above that was 98.46, after which 98.67 comes back into the equation.

US Dollar Hourly Price Chart

US Dollar hourly price chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD Resistance Test

Going along with that support test in USD has been a resistance test in EUR/USD around this morning’s ECB.

As looked at on Monday the pair was pushing through a big cluster of support points after showing ‘falling knife’ like price action. But as a bit of calm developed yesterday with risk-prone markets like Gold, oil and more recently, the US Dollar started to pullback. This allowed for EUR/USD to snap back as well, running all the way up to the 1.1100.

This was an area of prior support that has since held the highs in the pair. The next spot of support tis around 1.1057, followed by the 1.1000 handle. Bears making progress below either of those levels re-opens the door for the bigger picture bearish theme ahead of next week’s FOMC.

EUR/USD Four-Hour Price Chart

EURUSD four hour price chart

Chart prepared by James Stanley; EURUSD on Tradingview

GBP/USD

Cable set a fresh yearly low on Monday. I’ve been bearish on the pair for a little while now and that remains, with GBP/USD still looking to be one of the more attractive long-USD candidates, in my opinion.

We are however nearing a big spot of possible long-term support, around the 1.3000 psychological level. So there may be an open door for short-term bearish scenarios down to that big figure. The next support on my chart is the same 1.3106 level that helped to cauterize the low on Monday, followed by 1.3065 after which 1.3000 comes into play.

GBP/USD Four-Hour Price Chart

gbpusd four hour price chart

Chart prepared by James Stanley; GBPUSD on Tradingview

AUD/USD

On the short-side of the USD I’ve been bullish on AUD/USD. And even though the US Dollar has been incredibly strong the Aussie has been even stronger, substantiating the basis for a bullish reversal since testing the .7000 level in early-February.

The pair hit a fresh four-month high on Monday, catching resistance on the underside of a prior bear flag formation. I remain bullish on the pair and the next step to continue the trend would be a test of resistance at the Monday high, plotted around .7438, after which the .7500 level comes into play.

AUD/USD Daily Price Chart

AUDUSD daily 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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