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US Dollar May Have More Room to Rally: EUR/USD, USD/JPY, AUD/USD

US Dollar May Have More Room to Rally: EUR/USD, USD/JPY, AUD/USD

2020-02-11 04:00:00
Daniel Dubrovsky, Analyst
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US Dollar, EUR/USD, USD/JPY, AUD/USD, Technical Analysis – Talking Points

  • US Dollar may have more room to rise from technical standpoint
  • EUR/USD looking to take out key support along with AUD/USD
  • USD/JPY upward bias holding after taking out falling trend line

US Dollar Technical Analysis

The US Dollar, having already seen gains this year, may have more room to rally against some of its most-liquid counterparts. Below is my majors-based US Dollar index. It averages USD’s performance against the Euro, Japanese Yen, British Pound and Australian Dollar. Last week, the Greenback took out key falling resistance from September – blue line on the chart below.

Rising support from the beginning of this year is also helping my majors-based US Dollar index maintain its ascent after a Morning Star bullish candlestick pattern formed. The GBP/USD technical trajectory appears bearish after taking out a key trend line last week. This is as descending resistance appears to be upholding the downward technical bias in NZD/USD.

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Majors-Based US Dollar Index

US Dollar May Have More Room to Rally: EUR/USD, USD/JPY, AUD/USD

Chart Created Using TradingView

Euro Technical Analysis

If the US Dollar has more room to rally, this may take EUR/USD further downward and potentially take out key support. The latter is a psychological barrier between 1.0879 to 1.0898. If the Euro close under this area, that exposes lows from April 2017 which are a range between 1.0821 to 1.0852. Maintaining the overall downward trajectory is what appears to be potential falling resistance from December – red-dashed line below.

EUR/USD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -14% -5% -12%
Weekly -5% 20% 0%
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EUR/USD Daily Chart

US Dollar May Have More Room to Rally: EUR/USD, USD/JPY, AUD/USD

Chart Created Using TradingView

Japanese Yen Technical Analysis

The upward trajectory in USD/JPY is being maintained by rising support from August 2019. The Japanese Yen also took out a key falling trend line from 2018. To resume gains, the currency pair faces the January high at 110.29. If the latter is taken out, that exposes highs from May 2019 around 110.67. Sitting above that is the midpoint of the Fibonacci extensions at 111.22. Closing under 108.31 may shift the outlook bearish.

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USD/JPY Daily Chart

US Dollar May Have More Room to Rally: EUR/USD, USD/JPY, AUD/USD

Chart Created Using TradingView

Australian Dollar Technical Analysis

The US Dollar still faces key support against the Australian Dollar which if overcome, may extend the dominant downtrend in AUD/USD. The latter is the psychological barrier between 0.6672 and 0.6701. Positive RSI divergence does show fading downside momentum which may precede a turn higher. Maintaining the near-term descent is a potential falling trend line from early January.

AUD/USD Daily Chart

US Dollar May Have More Room to Rally: EUR/USD, USD/JPY, AUD/USD

Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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