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FX Price Action Setups in EURUSD, USDJPY and USDCHF

Forex Talking Points:

- If you’re looking to improve your trading approach, our Traits of Successful Traders research could help. This is based on research derived from actual results from real traders, and this is available to any trader completely free-of-charge.

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If you’d like to sign up for our webinars, we host an event on Tuesday and Thursday, each of which can be accessed from the below links:

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US Dollar Drops to 96.47 Fibonacci Level

The US Dollar’s topside run has taken a pause, as prices have pulled back to a fresh weekly low on the heels of some comments from FOMC Member, Loretta Mester earlier this morning. Ms. Mester indicated that balance sheet reduction could be put on hold if need-be, and shortly after these comments made their way through markets the US Dollar had started to soften in its topside run. The week is young for USD drivers, however, as tomorrow brings meeting minutes from the January FOMC rate decision and Thursday brings US Durable Goods orders. There is also a continued outlay of Fed-speak this week, with Mr. James Bullard providing comments tomorrow and Friday, and Mr. Rafael Bostic speaking about the economic outlook and monetary policy on Thursday.

In the US Dollar, prices are re-testing the 96.47 Fibonacci level, which is the 23.6% retracement of the post-Election run in the Greenback.

US Dollar Four-Hour Price Chart

us dollar usd four hour price chart

EURUSD Bounces From Support Zone

For the past three months, EURUSD has held into a fairly consistent range, with support showing from 1.1215-1.1300 while resistance has set-in around 1.1448-1.1500. Last week saw prices move into the support side of that zone, and after virtually all of that period saw back-and-forth price action, buyers have finally budged up to a fresh weekly high. This can keep the door open for the longer-term range in the pair as looked at in this week’s FX Setups.

EURUSD Eight-Hour Price Chart

eurusd eur/usd eight hour price chart

GBPUSD Rips

GBPUSD has put in a very big day as prices have jumped back-above the 1.3000 psychological level. And while I was looking at bearish potential in the pair coming into this week, that idea no longer looks attractive after buyers made their mark. At this stage, traders will likely want to continue keeping exposure in GBP-pairs limited, as a very uncertain backdrop around Brexit can continue to evoke sharp moves. On the support side of the pair, the 1.3000 area could be of interest for those looking at bullish strategies; while resistance from 1.3106-1.3117 could remain of interest for reversal potential or, for targets on bullish positions.

GBPUSD Two-Hour Price Chart

gbpusd gbp/usd two hour price chart

USDJPY Holds Strength Even as USD Tips Over

Similar to what was seen last week, USDJPY bulls have largely held the line even as a reversal in USD has shown. This indicates that Yen-weakness remains as an attractive theme, particularly for those looking at bullish USD-exposure.

The big question around the pair at this point is whether bulls are in a spot where they can push, or whether a deeper retracement might be needed. Coming into this week, I focused-in on that prior zone of resistance for the next potential higher-low support test. That zone runs from 109.67-110.00 and, as yet, it hasn’t been tested for support since last week’s topside breakout.

USDJPY Four-Hour Price Chart

usdjpy usd/jpy four hour price chart

On a shorter-term basis, it appears as though a bear flag formation is building on the hourly. This could provide that deeper support test should the formation play-out.

USDJPY Hourly Price Chart

usdjpy usd/jpy hourly price chart

USDCHF Back to Parity

I had looked at reversal potential in USDCHF last week as the pair re-engaged with a notable level around 1.0096. That resistance has since held, and prices have perched back to the parity level in the pair. This can keep the door open for a deeper reversal; and for those with shorter-term strategies, a nearby area of prior support turned resistance can re-open the door for bearish themes in the pair.

USDCHF Two-Hour Price Chart

usdchf usd/chf two hour price chart

USDCAD Retains Bearish Potential

USDCAD continues to carry an element of congestion after last week’s topside push; but the fact that a bearish trend-line has continued to help hold resistance can keep the door open for bearish strategies in the pair. The fact that USDCAD wasn’t more reactive to this morning’s USD-weakness, however, should be noted, as this may not be the most amenable venue for trading pure USD-weakness.

USDCAD Four-Hour Price Chart

usdcad usd/cad four hour price chart

AUDUSD Moving Back Towards Key Resistance .7185-.7206

Last week when I looked at AUDUSD, the pair had worked between short-term support and resistance levels. I had opined that the pair first needed to pose a move before strategy could be derived, and that scenario may be nearing: AUDUSD has pushed up towards a key area of potential resistance. That zone runs from .7186-.7205; and a re-emergence of sellers in this zone re-opens the door for bearish strategies in the pair.

AUDUSD Hourly Price Chart

audusd aud/usd hourly price chart

NZDUSD Testing Above Big Zone

NZDUSD has a key zone that prices are currently testing above; and the way that traders treat this move may provide clue for the next directional move in the pair. Should prices break down to show a daily close below .6870-.6877, the potential for reversals becomes attractive. Alternatively, should prices push down to this zone to find short-term support, the door opens for shorter-term bullish continuation strategies. If neither of the above happens, patience is the name of the game until the setup cleans up.

NZDUSD Hourly Price Chart

nzdusd nzd/usd hourly price 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 Q4 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 an abundance 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