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US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

2019-10-17 09:30:00
Paul Robinson, Currency Strategist
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US Dollar Technical Highlights:

  • US Dollar Index (DXY) in search of support
  • GBPUSD breaking above confluent resistance
  • EURUSD heading towards Feb ’18 trend-line
  • USDCAD has an interesting big-picture outlook

Check out the intermediate-term fundamental and technical outlook for major markets and currencies in the DailyFX Quarterly Forecasts.

US Dollar Index (DXY) in search of support

The US Dollar Index (DXY) is probing the September low, but more importantly it has the trend-line from the February 2018 low in sight. The 200-day is also running up in near confluence, making the 97.60/36 area quite important. At first the benefit of the doubt goes to it holding. However, should it break then the tumble is likely to continue down to an even more important line of support via the bottom-side line of the channel in place since over a year ago. The channel has kept the DXY in check on both sides, it will take a breakout from this structure to see a material breakout in developed market currencies.

US Dollar Index (DXY) Weekly Chart (lower channel low very important)

US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

U.S. Dollar Currency Index (DXY) Charts by TradingView

US Dollar Index (DXY) Daily Chart (trend support just below, hold or fold?)

US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

GBPUSD breaking above confluent resistance

Cable has put in a 5-day rate of positive change as strong as any since the extremely volatile days of early 2009. The impressive rally is curently overbought, but this type of momentum can keep price overbought for a bit. Further suggesting this could be the case is the fact that GBPUSD broke confluent resistance via the trend-line from April 2018 and 200-day, along with the upper parallel of the channel off the low. Currently trading around a minor level of resistance from April, but no really big resistance for a good way up into the 13000s.

GBPUSD Daily Chart (extreme move breaks trend resistance)

US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

GBP/USD Chart by TradingView

EURUSD heading towards Feb ’18 trend-line

The Euro is challenging resistance around the 11080 mark right now, but should that give-way (currently is), then the February 2018 trend-line is the next big challenge, just as it is for the DXY on the downside – which makes sense since the Euro is 57% of the DXY index. The 200-day lies beyond the trend-line at 11210. The pattern has been to see rallies (and sell-offs) fizzle before gaining momentum, same old pattern or will after many painful months will volatility finally see an uptick?

EURUSD Daily Chart (heading towards February 2018 trend-line)

US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

EUR/USD Chart by TradingView

USDCAD has an interesting big-picture outlook

USDCAD is quickly coming up on a big test of major long-term support via the 2012 trend-line. It recently held in July, once again confirming its importance. Should it soon fail a major leg lower could be in store. A drop through 13018, the July low, will act as further confirmation of a trend-line break and should have USDCAD rolling downhill. Interestingly, the past year’s price sequence is a microcosm, or as a friend corrected me yesterday, a ‘fractal’, of the price sequence dating back to the 2016 high.

The 3/2 pattern (consisting of 3 highs, 2 lows) is leaning such that the next break could be rather material, and with price at the important 2012 trend-line, things are lining up nicely. But before we get ahead of ourselves here the trend-line is to be treated as support until it breaks…

USDCAD Weekly Chart (headed for a big spill, potentially)

US Dollar Outlook: DXY, GBPUSD, EURUSD & USDCAD Charts

USD/CAD Chart by TradingView

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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