In this webinar, we looked at price action setups after the US Dollar pulled back from another resistance test this morning. Just ahead of the start of our webinar, an announcement had crossed the wires that the ECB may look at stimulus exit options at their rate decision in June, dubbing it a ‘live meeting.’ This helped to firm EUR/USD back up to resistance, helping the US Dollar push back down to support, and this keeps the backdrop around Euro-related pairs as rather volatile in the near-term.

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US Dollar Holds Resistance, Revisits Support, Deeper Sell-Off May be in Store

In the US Dollar, we looked at another test of resistance this morning as prices firmed-up to that confluent zone of Fibonacci resistance that runs from 94.19-94.30. This area had shown as both resistance and support last week, and the weekly bar closed as a Doji right around this key level on the chart. This opens up the possibility of a deeper pullback after what’s become a really strong six-week run that’s retraced 38.2% of that prior down-trend. That prior down-trend retraced 61.8% of the 2014-2017 move; and the 38.2% retracement of that study resides at 94.30, helping to mark the confluence of resistance in that area on the DXY chart.

US Dollar via ‘DXY’ Hourly Chart: Drop From Resistance to Support

US Dollar USD Hourly Chart DXY

Chart prepared by James Stanley

EUR/USD with Short-Squeeze Potential

EUR/USD has now held in the resistance zone that we’ve been following now for four trading days. Prices were tilting-lower earlier today, but after the announcement that the ECB may be looking at stimulus exit at their rate decision later this month, prices quickly firmed-up to the top portion of that resistance zone. This opens the door for short-squeeze possibilities, particularly should the prior swing-high of 1.1750 get taken-out. We didn’t look at bullish setups here, instead choosing to direct short-USD plays elsewhere (AUD/USD, NZD/USD).

EUR/USD Four-Hour Chart

eurusd eur/usd four-hour chart

Chart prepared by James Stanley

GBP/USD Builds into Bear Flag

GBP/USD is now testing the 1.3400 level, and this was a previous swing-high in the pair before those fresh 2018 lows had printed. In our FX Setups for This Week, we looked at the short-side of Cable as our preferred way of looking for USD-strength, looking for prices to remain below the prior swing-low of 1.3450. Price action remains in a bear flag formation, and the door remains open to short-side strategies.

GBP/USD Four-Hour Chart: Brewing Bear Flag

gbpusd gbp/usd four-hour chart

Chart prepared by James Stanley

USD/CHF With Deeper Bearish Potential

USD/CHF appears to have underwent a tonality change in the month of May. Whereas the previous topside trend was near-parabolic in nature, prices were unable to hold above the level of parity, and have now taken a bearish turn on the charts. We looked at the prospect of playing short-side breakouts on a bearish move below .9823, targeting .9750 and .9700 on the underside of current price action.

USD/CHF Four-Hour Chart: Tonality Change in the Month of May

usdchf usd/chf four-hour chart

Chart prepared by James Stanley

USD/JPY Remains Messy

USD/JPY put in another test of the 110.00 level; but direction remains lacking as last week’s lower-low has yet to be offset by a higher-high. This keeps USD/JPY in a cautious spot, with the one item of interest being a re-test of the Fibonacci level at 109.19, opening the door for longs and a re-test of 110.00.

AUD/USD with Higher-Low Support Potential

We’ve been following the long side of AUD/USD over the past couple weeks for short-USD exposure. The item of interest here is the fact that prices have continued to make higher-highs and higher lows over the past month, re-taking the .7500 level and setting a fresh seven-week high shortly after this week’s open. In our FX Setups for This Week, we looked to play a pullback, positing that we may have higher-low support around an area of prior resistance in the .7600-vicinity. We updated that setup earlier this morning when support was showing, and that setup remains workable for short-side USD approaches.

AUD/USD Four-Hour Chart: Higher-Low Support Potential Around Prior Resistance .7600

audusd aud/usd

Chart prepared by James Stanley

NZD/USD with Bullish Range-Fill Potential

This is the second short-USD setup that we’re following for this week, and the backdrop here is a range that’s been in-effect now for two years. We started following the long side of the pair a couple of weeks ago, and we updated the setup yesterday, looking to play a shorter-term bullish trend inside of that longer-term range. Earlier this morning, we looked at that support coming into play around the .7000-handle.

NZD/USD Two-Hour Chart: Higher-Low Support Potential at the .7000 Big Figure

nzdusd nzd/usd four hour chart

Chart prepared by James Stanley

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 DailyFX.com

Contact and follow James on Twitter: @JStanleyFX