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

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

2020-02-20 20:00:00
James Stanley, Strategist
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US Dollar, EUR/USD, USD/CAD, USD/JPY Talking Points:

  • It’s been a busy past 48 hours across global markets.
  • A quick rush of Yen-weakness has grabbed attention in FX markets.
  • Is there a bigger risk off move lurking?

US Dollar Jumps to Three-Year-High as Signals Continue to Show

Continuing our theme from Tuesday, a number of peculiarities have continued to show across global markets; and perhaps this is but a coincidental occurrence or, perhaps something larger is afoot in the risk trade but, at this point, a quick rush of selling showed up in US equity indices. This comes just after yesterday’s massive breakout in USD/JPY which, itself, tracks a strong bullish breakout in Gold. All of this is happening as the US Dollar pushes up to fresh three-year-highs as US Treasury yields tick back down to 2020 lows.

Suffice it to say, caution is warranted. But, as usual, the game must go on and setups remain around the US Dollar in a variety of venues that were looked at in this webinar.

US Dollar Daily Price Chart

USD Price Chart US Dollar

USD on Tradingview

EUR/USD Stretched – Sellers Unable to Yet Fill the Gap

I had looked into this one on Tuesday and a similar backdrop remained today. Price action in EUR/USD has begun to fill the gap from April of 2017 but, ominously sellers have been unable to break much fresh ground. The 1.0814 Fibonacci level did come in as short-term resistance but, as yet, sellers haven’t been able to substantiate much run beyond prior lows.

At this point, the item of attraction would appear to be the potential for a Friday pullback ahead of the weekend that could, possibly, allow for short-side trend strategies to come back into play. Levels around 1.0863, 1.0890 or perhaps even 1.0925 could remain of interest for as such. Outside of that, the big zone of prior support around the 1.1000 psychological level hasn’t yet been tested for resistance, and this could be a workable item should a stronger rally begin to show.

EUR/USD BEARISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 20% -6% 6%
Weekly 62% 8% 32%
Current Retail Sentiment in EUR/USD
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EUR/USD Two-Hour Price Chart

EURUSD EUR/USD Price Chart

EUR/USD on Tradingview

USD/JPY: Something’s Afoot – but What?

At this stage, a deduction of drivers would suggest that fear of Japanese recessionary pressure is pushing in a frame of Yen-weakness. There was a nasty machine orders data release a couple of days ago, just ahead of the USD/JPY breakout, so that syncs up. There’s also the fear of a greater risk due to Coronavirus spread, so perhaps this is just a potent cocktail of fear meshing up with bad data, creating a significant market move. But, at this stage, the prior safe-haven scenario that I was looking at for Yen-strength is no longer workable nor attractive, so its time to adapt.

USD/JPY MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -6% 16% 6%
Weekly 31% 8% 16%
Current Retail Sentiment in USD/JPY
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From the USD/JPY chart, if additional stretch does show – there’s short-side potential; taken from a resistance zone that capped the 2019 swing high, taken from around the 112.50 psychological level.

USD/JPY Daily Price Chart

USDJPY USD/JPY Price Chart

USD/JPY on Tradingview

USD/CAD Turn Potential – Short-Term Bullish Backdrop

I had looked into this one earlier today as there’s a workable scenario on either side of the equation. Longer-term, bearish swing potential remains as prices have held resistance around the November swing-high. Shorter-term, however, and there would be a few factors of strength in consideration, key of which has been the build of a falling wedge after that resistance test, coupled with the inclusion of support as taken from the 38.2% Fibonacci retracement of the 2018-2019 major move in the pair.

USD/CAD Four-Hour Price Chart

USD/CAD USDCAD Four-Hour Price Chart

USD/CAD 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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