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US Dollar Price Action Setups in EUR/USD, GBP/USD and AUD/USD

US Dollar Price Action Setups in EUR/USD, GBP/USD and AUD/USD

2019-04-18 19:08:00
James Stanley, Currency Strategist
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US Dollar, EUR/USD, GBP/USD, AUD/USD Talking Points:

Tomorrow brings the Good Friday Holiday, and Monday is Easter, meaning many Western markets will be closed in observance of holidays. But in an ironic twist, many markets began to show breakout tendencies ahead of the weekend despite the fact that much of 2019 trade has been populated by back-and-forth price action.

In this webinar, I tried to take a step back to look at the bigger picture across a series of US Dollar backdrops.

US Dollar Pushes Towards Key Resistance

At the source of many of the current FX moves, the US Dollar has finally began to trade-higher after a general tone of weakness had populated early Q2 trade. As of the Tuesday webinar, the US Dollar was without much to speak of for trends. But that began to shift yesterday and hit fever pitch today as USD bulls pushed prices up to fresh two-week-highs, with price action testing above a descending trend-line connecting the March, April highs.

This makes for a difficult backdrop to plot for USD-strength given the context, and this can keep the door open to a pullback to support in the early-portion of next week, perhaps around the 97.00 level, to look for re-engagement at 97.70.

US Dollar Eight-Hour Price Chart

us dollar usd eight hour price chart

Chart prepared by James Stanley

EURUSD Breaks Below Bear Flag – but Can Bears Push the Breakout?

Going along with that move of strength in the US Dollar has been a bearish push in EURUSD. The pair has broken below the bear flag formation looked at yesterday, and prices made a quick-run towards longer-running range support from 1.1187-1.1212; and as looked at this morning – that made for a difficult prospect around risk-reward in bearish scenarios.

Similar to the US Dollar above, plotting for fresh breakouts around holiday conditions can be a difficult prospect. This keeps the door open for another support inflection at this key zone. Bearish breakouts can be sought on a push below 1.1175 in the early-portion of next week, and sellers also have the option of looking for a pullback to prior support around 1.1250 to re-open the door for bearish trend strategies.

EURUSD Four-Hour Price Chart

eur/usd eurusd four hour price chart

Chart prepared by James Stanley

GBPUSD: Bear Trap Potential Ahead of Holiday Trade

GBPUSD is in a similar spot as EURUSD above, where a longer-term case of digestion has come into focus ahead of the holiday. In GBP/USD, the pair has been building a descending triangle over the past couple of months, with multiple inflections around support from 1.2960-1.3000, while resistance has continued to come-in at lower-highs over the past month. Such a formation will often be approached in a bearish fashion, looking for the motivation that’s driven-in sellers at lower-highs to, eventually, take-out the horizontal level of support.

The big question is whether that can happen now as holiday conditions near. This could be a bear trap that traders want to avoid until next week might present a cleaner backdrop for near-term analysis.

GBP/USD Four-Hour Price Chart

gbpusd gbp/usd four hour price chart

Chart prepared by James Stanley

AUD/USD Holds Resistance at Key Fib – Range Continuation or Eventual Bullish Break?

I’ve been focusing on the range in AUD/USD over the past month and, by and large, that’s worked out well. Yesterday saw the top-side of ‘r2’ come into play at .7206, which is a long-term Fibonacci level, and this has helped to hold the highs in the pair. Prices reacted by dropping 70-pips off of that level but, curiously, as US Dollar strength has run rampant, AUD/USD has seen softening around the lows, with buyers offering support in the prior zone of ‘r1’ resistance. This can place emphasis on an area from .7113-.7125, looking for buyers to hold up the lows there in order to bring on another resistance test at .7185-.7206.

AUD/USD Four-Hour Price Chart

audusd aud/usd four hour 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

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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

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

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