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Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

Paul Robinson, Strategist

The U.S. Dollar Index (DXY) broke through a confluence of support, triggering a sizable wedge pattern; this sets it up for lower prices over the intermediate-term. Bounces will develop at times, though, and these may give would-be shorts an opportunity to enter bearish wagers. The Euro at resistance, could pull back to support soon. USDCAD looks to be in trouble on the weekly time-frame, near-term resistance could soon get hit. GBPUSD weakness could lead to development of bottoming price pattern.

Technical Highlights:

  • Dollar Index (DXY) counter-trend bounce could develop
  • EURUSD pullback to support may provide spot for longs
  • USDCAD headed lower big-picture, watch resistance
  • GBPUSD pullback will help further a bottoming pattern

For forecasts and educational guides, check them out on the DailyFX Trading Guides page.

Dollar Index (DXY) counter-trend bounce could develop

Last week, the US Dollar Index (DXY) closed a weekly candlestick outside of a rising wedge pattern and below confluent support that involved the bottom of the formation and the 200-day MA. This sets USD up for lower prices, but there will be bounces along the way.

Right now, support from March is in play. A bounce from there could offer up an opportunity for would-be shorts to enter for a move to the next set up of support levels carved out in January in the vicinity of 95.16/03.

US Dollar Index (DXY) Weekly Chart (broke wedge formation)

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

US Dollar Index (DXY) Daily Chart (trying to bounce from support)

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

EURUSD pullback to support may provide spot for longs

In reverse of the DXY, the Euro broke a falling wedge formation. EURUSD is currently challenging levels from March; a pullback from around here will have the June 7 high and 200-day combo in focus right around 11350. Below there a retest of the January trend-line might take shape. As long as the rally doesn’t turn into a swift down-move as other rallies have since last year, then the Euro may be set up soon to keep on extending the wedge-break.

EURUSD Daily Chart (watch pullback to support)

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

USDCAD headed lower big-picture, watch resistance

USDCAD is showing little to no life at this juncture after breaking down out of a longer-term channel structure. It looks poised to do as it did a couple of years ago. In the event of strength, watch the 13238 up to 13300 area for signs of stalling upward momentum. Overall, rallies and/or consolidations look set to turn into new swing-lows for the foreseeable future.

USDUSD Weekly Chart (looks like a repeat of 2017)

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

USDCAD Daily Chart (weak bounce, resistance ahead)

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

GBPUSD pullback will help further a bottoming pattern

Cable traded around the October 2016 trend-line for a couple of weeks, and on a daily basis depending on how it was drawn, it broke through at one point. With last week’s bounce and close on a weekly basis above the trend-line, I moved it to beneath the weekly low while still allowing it to maintain its integrity in connecting lows from October 2016, early 2017, very near the January flash-crash low, and the low from a week ago today.

This will be the long-term line-in-the-sand I will work with. A pullback from here could, could set up an inverse head-and-shoulders (H&S) pattern. This is only a scenario but may be a worthy one given long-term support and the generally poor posturing of the Dollar against other currencies. For now, in ‘wait-and-see’ mode until further price action confirms outlined scenario.

GBPUSD Daily Chart (inverse H&S > long-term t-line?)

Dollar May Bounce: EURUSD, USDCAD, GBPUSD Charts & More

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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

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