US Dollar, EUR/USD, USD/CAD, AUD/USD, GBP/USD – Weekly Technical Outlook
- The US Dollar’s descent slowed last week. Will the trend reverse?
- EUR/USD wedge breakout slows, USD/CAD remains range-bound
- AUD/USD near-term outlook bearish, GBP/USD eyes rectangle
EUR/USD – Neutral
The Euro remains above lows set against the US Dollar in August when EUR/USD broke above a bullish Falling Wedge chart pattern. Follow-through after the breakout hinted that the pair could reverse the downtrend from May through the middle of August. Since then, the pair has struggled to find lasting momentum after hitting key resistance points.
Front and center is a zone of resistance between 1.1887 and 1.1909, where prices have left behind a bearish Shooting Star candlestick. Over the past few trading sessions, the pair saw some downside progress. Keep a close eye on the 50-day Simple Moving Average (SMA), which could reinstate the upside focus. Further gains may put the spotlight on the 100-day SMA. Otherwise, EUR/USD could revisit the August low at 1.1664.
USD/CAD – Neutral
While the US Dollar remains higher against Canadian Dollar relative to May lows, USD/CAD has spent most of its time consolidating since the middle of July. A bullish Golden Cross emerged between the 50- and 100-day SMAs in early August, offering a broader upside technical bias. Still, the pair has been consistently struggling around the July high at 1.2808, making for a key resistance point.
Resuming the May uptrend would entail pushing into the long upper wick established on August 20th. At that time, prices stopped short of the December 21st peak at 1.2957. As such, one could argue that the zone between 1.2808 – 1.2957 makes for a critical, wide range of resistance. To the downside, the 100-day SMA could emerge as pivotal support and help reinstate the upside focus. Breaking below that may open the door to revisiting the 2021 low.
AUD/USD – Bearish
The US Dollar could see some renewed strength against the Australian Dollar ahead. AUD/USD left behind a Bearish Harami last week, opening the door to a turn lower. Moreover, a bearish Death Cross between the 50- and 100-day SMAs remains in play. Key support could be the 0.7329 – 0.7290 inflection zone. Beyond that sits the August 27th low at 0.7222 before opening the door to testing the August low at 0.7106.
In the event of a turn higher instead, the 100-day SMA could step in as key resistance, pivoting the Aussie lower. Moreover, a potential falling trendline from February may keep the dominant downtrend intact. In other words, there may still be room for upside potential, but the medium-term bias seems to be tilted to the downside.
GBP/USD – Neutral
The US Dollar remains in a consolidative state against the British Pound. In the medium term, GBP/USD seems to be oscillating within the boundaries of a bullish Rectangle. The floor of the chart pattern seems to be between 1.3572 and 1.3671. The latest test of this zone could hint that the pair may climb towards the ceiling, which appears to be a range between 1.4182 and 1.4251.
Breaking above the ceiling may open the door to resuming the uptrend seen from September 2020 through February 2021. Still, a bearish Death Cross between the 50- and 100-day SMAs is underscoring the technical bias to the downside. In the event of a breakout under the rectangle, the pair may become increasingly at risk of a material turn lower.
--- Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
