US Dollar, EUR/USD, GBP/USD, USD/CAD, USD/JPY - Technical Forecast
- US Dollar sees best performance since 2008 for a second week in a row
- My Dollar index is fast-approaching its highest point since 2001 & 2002
- EUR/USD, GBP/USD, USD/CAD, USD/JPY all facing critical tech tests
US DollarWeekly Recap
For a second week in a row, the US Dollar saw gains that were last seen during the 2008 financial crisis. The Greenback was also able to trim losses towards the end of Friday as momentum appeared to remain in its favor. From a fundamental perspective, the coronavirus outbreak has fueled demand for a haven and liquidity. On this front, the Dollar’s major counterparts struggle to match its world’s reserve status.
On the 4-hour chart below is my majors-based USD index, averaging it against EUR, JPY, GBP and AUD. The Dollar is fast-approaching its most-expensive price since the turn of the century. Guiding the Greenback higher are two levels of rising support, “inner” and “outer” below. If the former is taken out, down the road the latter may kick in and pauses a selloff. Climbing through 2001 and 2002 peaks may extend gains.
Majors-Based US Dollar Index – 4-Hour Chart
Dollar Chart Created in TradingView
EUR/USD Technical Outlook
The dominant downtrend in EUR/USD holds as the currency pair looks to target lows from 2017. This past week, we saw the Euro weaken and confirm a breakout under February lows. Positive RSI divergence does persist however and that shows fading downside momentum. That may precede a turn higher ahead. Keep an eye on “inner” resistance on the chart below which may keep gains at bay. A strong reversal in the Euro may eventually lead to a retest of “outer” resistance which could still maintain the downtrend.
EUR/USD4-Hour Charts
EUR/USD Chart Created in TradingView
GBP/USD Technical Outlook
GBP/USD broke under lows from 2016 and 2017 over the past 5 trading days. This leaves Sterling targeting its lowest point since 1985 at 1.0520. Yet, prices appeared to find a bottom which is a range between 1.1407 to 1.1470. On the other hand, there appeared to be a false breakout above “inner resistance” on the 4-hour chart below.
A descent through last week’s low exposes the 38.2% Fibonacci extension at 1.1249 followed by the midpoint at 1.1038. A turn higher may not necessarily overturn the dominant downtrend. That is because “outer resistance” may come back into play down the road.
| Change in | Longs | Shorts | OI |
| Daily | 2% | 15% | 6% |
| Weekly | 8% | -14% | 1% |
GBP/USD4-Hour Chart
GBP/USD Chart Created in TradingView
USD/CADTechnical Outlook
Despite a pullback into the end of last week, USD/CAD still experienced its best 5-day gain since 2011. The Canadian Dollar got stuck within peaks from 2016 which make for a range of resistance between 1.4576 to 1.4690. An Evening Star candlestick pattern – which is a bearish formation - also preceded the top alongside negative RSI divergence. Still, the dominant uptrend holds via “inner” and “outer” support below. If USD/CAD can push through peaks from 4 years ago, gains may prolong.
For timely updates on US Dollar price action, you may follow me on Twitter here @ddubrovskyFX
USD/CAD4-Hour Chart
USD/CAD Chart Created in TradingView
USD/JPY Technical Outlook
USD/JPY extended the uptrend after bottoming earlier this month. In the week ahead, we may see the pair attempt to push through peaks from 2019 which makes for a range of resistance between 111.92 to 112.30. Negative RSI divergence does show to proceed with caution however. Maintaining gains are layers of “inner” and “outer” support on the chart below. These may come into focus in the event of a turn lower. Otherwise, we may see the currency pair target peaks from 2 years ago.
USD/JPY4-Hour Chart
USD/JPY Chart Created in TradingView
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
