US Dollar Technical Forecast: EUR/USD, GBP/USD, USD/CAD, DXY
US Dollar Technical Highlights:
- US Dollar Index (DXY) may have another leg down left in it, or not
- EUR/USD pulling back, watch how support is handled
- GBP/USD holding rally well so far, a lot is riding on Brexit of course
- USD/CAD on the brink a big drop, but has support nearby
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US Dollar Index (DXY) may have another leg down left in it, or not
The US Dollar Index (DXY) bounced last week after a tough three weeks. Is it another swing-low as has happened after minor sell-offs during the past few months, or only a small bounce before testing larger support? In the past the swings higher have been pretty persistent coming out of the gate, which thus far has been the case. But should we see momentum turn down, the trend-line from September of last year will be targeted under 9700.
US Dollar Index (DXY) Daily Chart (failure to keep the bounce will have t-line in play)
EUR/USD pulling back, watch how support is handled
The Euro is the main driver of the DXY, and as such if support that was being tested on Friday breaks, then the retracement could grow legs into a full-on reversal higher for the Dollar Index. A solid reversal back to the upside, though, could show some change of character for EURUSD, in that it finally holds a surge off the lows. For now, risk is becoming elevated of more weakness if that doesn’t happen very soon.
EURUSD Daily Chart (watch support)
GBP/USD holding rally well so far, a lot is riding on Brexit of course
Cable is a tough one to get a good handle on with all uncertainty surround Brexit. So far it is holding up well after the recent surge. This bodes well from a technical standpoint, but that could quickly change if things don’t go Sterling’s way. Watch the upper parallel of the channel off the lows, it is only a minor level of support so a test and hold would be a bullish event.
GBPUSD Daily Chart (holding…so far)
USD/CAD on the brink a big drop, but has support nearby
I wrote extensively on Friday about USD/CAD, where I highlighted the big-picture potential for it to drop sharply in the month’s ahead. But before that can happen, the low from the summer at 13015 (we’ll call it 13000) needs to break to give the bearish thesis a real go. This coming week that level could very well get tested and hold or fold.
USD/CAD Daily Chart (summer low a big level to watch)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.