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US Dollar Pulls Back from 2018 Highs: Price Action Strategy

US Dollar Pulls Back from 2018 Highs: Price Action Strategy

James Stanley, Senior Strategist

In this webinar, we used price action to look at macro markets after the continued topside run in the US Dollar. USD ran-up to fresh 2018 highs earlier today, and this continues the three week-run of strength that began to show in mid-April. There was quite a bit of intra-day volatility today around the Iran deal, and this was a point of contention over a few of the USD-based setups that we looked at today.

Talking Points:

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US Dollar Pulls Back From Fresh 2018 Highs

It’s been an interesting day in the US Dollar with a bit of volatility creeping in around the drama surrounding the Iran deal. The Greenback opened this morning’s US session by continuing up to fresh 2018 highs, with a pullback starting to show at around 10AM ET. Prices moved down to a prior point of resistance on DXY around the 93.00 level, and that’s so far held as higher-low support. USD may still be overbought, however, and a deeper retracement could make the prospect of bullish continuation look considerably more attractive. We honed in on the area from 92.20-92.50 to look for such a support level and, as usual, we kept a balanced approach around the US Dollar so that we could have something to work with under each scenario (strength continues/strength reverses).

Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment Indicator.

US Dollar via ‘DXY’ Hourly Chart: Pullback from 2018 Highs, Support at Prior Resistance 93.00

US Dollar Hourly Chart

Chart prepared by James Stanley

EUR/USD Remains Bearish Short-Term

EUR/USD put in a bounce from a short-term support level we looked at yesterday, but from the hourly chart there is no evidence to suggest that a bottom is yet in place. As a matter of fact, the hourly chart may be keeping the door open for bearish continuation towards the 1.1750 area on the chart. A bit below that is an attractive support zone: This runs from 1.1685-1.1736, and this was an area that we were using in the second half of last year on the pair, comprised from retracements taken from a couple of different Fibonacci studies.

Do you want to see how retail traders are currently trading EUR/USD? Check out our IG Client Sentiment Indicator.

EUR/USD Hourly Chart: Bearish Continuation with No Evidence Yet of Bottom-in-Place

eurusd hourly chart

Chart prepared by James Stanley

GBP/USD: Oversold and Grinding at Key Support Ahead of BoE

By comparative analysis, GBP/USD has not been as bearish as EUR/USD going back to last Friday. While GBP/USD continues to hold support around last Friday’s low, EUR/USD is continuing with lower-lows and lower-highs. Deductively, this makes GBP/USD as an attractive candidate for playing the short-side in USD, particularly given the backdrop of factors that could strengthen the prospect of a bullish reversal in the pair. GBP/USD has run down to a key level of support around 1.3500, which has continued to help hold the lows since last week. Daily RSI has become oversold after a really strong reversal in April, and the Bank of England is set for a ‘Super Thursday’ rate decision later this week. We looked at the reversal setup in the pair in yesterday’s Analyst Pick with setups for this week.

Do you want to see how retail traders are currently trading GBP/USD? Check out our IG Client Sentiment Indicator.

GBP/USD Hourly Chart: Continued Grind in Support Zone 1.3478-1.3500

gbpusd hourly chart

Chart prepared by James Stanley

USD/CHF Near-Parabolic as Parity Eclipsed

The topside run in USD/CHF has been pretty remarkable, with nary a pullback on longer-term charts. Price action finally surged through parity, and traders would have to acknowledge the consistency with which this move has come-in, alluding to the fact that there’s been some fairly concerted CHF weakness to go along with what’s become a strong US Dollar. We looked at playing pullbacks in the effort of buying higher-low support in the pair.

NZD/USD for USD-Strength Scenarios

Commodity currency pairs remain attractive for continuation scenarios around US Dollar strength, and NZD/USD has been one of the more attractive vehicles for such a theme. The support side of a multi-year range is in sights, and with prices breaking below the psychological .7000 level, the door is opened for a re-test of lows around .6820-.6870. We looked at this setup in mid-April just ahead of the USD bullish run, and in yesterday’s Analyst Pick, we looked at another short-side NZD/USD setup on a print of fresh lows.

NZD/USD Daily Chart: Remaining Range Potential Down to .6820-.6870

nzdusd daily chart

Chart prepared by James Stanley

AUD/USD Takes out .7500- Now What

The psychological level of .7500 has been pretty important to AUD/USD. This level helped the pair bounce in December of last year, and that bullish run lasted for 600+ pips and well into January. But sellers came back and took control of AUD/USD from February-on, and last week we looked at price revisiting that big figure of .7500. Prices have broken down after a bit of headline risk last night, and now we have fresh 11-month lows to work with. At this point, a revisit towards that .7500 level could make short-side continuation a bit more attractive.

USD/CAD with Bullish Potential for Re-Test of 1.3000

USD/CAD has continued-higher, and earlier today we saw a failed test of the 1.3000 psychological level. That bullish breakout happened after the pair spent much of the past two weeks in a range-bound fashion, and this can allow traders to re-incorporate resistance from that range as higher-low support for bullish continuation.

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

--- Written by James Stanley, Strategist for

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