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Dollar Charts to Watch – EURUSD & GBPUSD Trading at Or Near Support

Dollar Charts to Watch – EURUSD & GBPUSD Trading at Or Near Support

Paul Robinson, Strategist

USD Chart Highlights:

  • USD Index (DXY) near top of ascending wedge
  • EURUSD has support from here down a bit lower
  • GBPUSD has strong support in 13000/2960-area

To see what fundamental drivers and technical signposts DailyFX analysts are watching, check out the Q2 forecasts for the Dollar, Euro, and Pound on the DailyFX Trading Guides page.

USD Index (DXY) near top of ascending wedge

The DXY is trading very near the top of the ascending wedge that has been building the past few months. With price so close to the top of the formation risk is skewed towards a move lower. There is still room for one more pop into resistance, but risk/reward favors the downside at this juncture.

A continuation of the narrowing range that the ascending wedge is made of will mean more of the same low-volatility trading, but at some point in the not-too-distant future that is likely to give-way to a sustained uptick in vol and more trade-able price action in major USD pairs.

DXY Daily Chart (Near top of ascending wedge)

DXY daily chart, near top of ascending wedge

Q2 US Dollar Forecast

EURUSD has support from here down a bit lower

The Euro makes up about 57% of the DXY, and as such it is largely responsible for how the it trades. So, the Euro trading around support is no surprise and may be why the DXY soon comes off a bit. If the recent low which formed near the March low doesn’t hold, there are still some support lines of varying age that run under last month’s low. From around 11200 down to 11000 is solid support even though it would come on a new cycle low.

A bounce isn’t expected to sustain for long as both trend and volatility are unfavorable for meaningful moves. Trend-lines from September and January 2018 would likely be difficult to overcome and present another spot of interest for would-be shorts.

EURUSD Daily Chart (support from here down to a little lower)

EURUSD daily chart, support from here to down a little lower

Q2 Euro Forecast

GBPUSD has strong support in 13000/2960-area

GBPUSD has been a place I’ve generally steered clear of due to ‘Brexit’, as whip-saw risk continues to be a constant threat. With that said, however, there is really solid support at its feet. Several lows are forming around the 13000/12960-area and along with them arrives the 200-day MA and trend-line drawn roughly from December. There are a series of small lower-highs developing since mid-March which is causing price to get mashed together into a wedge formation. This could mean we are about to soon make a break for it.

Support is support until it isn’t, so as long as that holds so does Cable. A breakdown though will of course shift this bias, while a break of the top-side wedge t-line may see buyers come back in. The feeling on this end is that overall GBPUSD is postured more bullish than bearish, but traders who are operating in Sterling will need to remain prepared for the unexpected and manage risk accordingly.

See what large speculators in the futures market are doing in both GBP and EUR.

GBPUSD Daily Chart (solid support, wedging up)

GBPUSD daily chart, solid support

Q2 Pound Forecast

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---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.