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US Dollar Price Action Setups: USD/CAD, EUR/USD

US Dollar Price Action Setups: USD/CAD, EUR/USD

2020-04-14 19:00:00
James Stanley, Strategist
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US Dollar, USD/CAD, EUR/USD Price Analysis:

  • The US Dollar has continued to drop following last week’s sell-off.
  • This webinar looked across the macro landscape, focusing-in on the US Dollar and related pairs.
  • Tomorrow brings a Bank of Canada rate decision and USD/CAD will likely remain in focus. EUR/USD also remains of interest.

US Dollar Continues Last Week’s Drop

The US Dollar has started this week with the same theme of weakness that defined last week’s backdrop in the currency. Following a riveting move in the middle of March, the US Dollar has now put in two weeks of digestion, and there remains a valid case on either side of the matter. For USD bulls – the driver is continued risk aversion, similar to the push that brought a trough-to-peak 8.8% move into the fray over 10 days in the middle of last month. On the weak side of the US Dollar – the driver would be the boatloads of stimulus that’s already been announced with the likely announcement of even more should the US economy require it.

In US Dollar price action, little could be qualified as extremely clear at the moment. Prices are sitting on the 50% marker of last month’s major move. This can keep the door open for themes of strength in the currency, although finding amenable pairings may remain of a challenge.

US Dollar Daily Price Chart

US Dollar Daily Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

USD/CAD Breaks Down – Bank of Canada on Deck

Tomorrow brings a Bank of Canada rate decision and the BoC has been very active of recent, as well as the Fed. I had looked into the setup late last week as a short-term descending triangle formation had formed. That formation has since filled-in with price action dropping down to a fresh low. But, as looked at in this webinar, there may be a type of trap forming as the setup looks very clean to the short-side; and has for a bit now yet sellers haven’t taken advantage of the situation, keeping the door open for a topside retracement ahead of tomorrow’s Bank of Canada rate decision.

USD/CAD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 17% 29% 22%
Weekly 49% -3% 18%
What does it mean for price action?
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USD/CAD Hourly Price Chart

USDCAD Hourly Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

EUR/USD: Crawling Back to 1.1000

On the long side of the US Dollar, traders may be challenged to find much of attraction, particularly on a longer-term basis. EUR/USD may be a candidate, however, as the longer-term setup has the pair near a very key area of support, as looked at below on the monthly chart.

EUR/USD MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 26% 14% 19%
Weekly 12% 45% 29%
What does it mean for price action?
Get My Guide

EUR/USD Monthly Price Chart

EURUSD Monthly Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

On a shorter-term basis, price action in EUR/USD has taken on a corrective tone, bouncing from last week’s lows within the confines of a rising wedge formation. This also looks similar to a bear flag but replace the bullish channel with the rising wedge, which can keep the door open for short-side approaches in the pair.

EUR/USD Four-Hour Price Chart

EURUSD Four Hour Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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