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

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

James Stanley, Senior Strategist

US Dollar, Price Action, EUR/USD, USD/CAD, USD/JPY Analysis

  • After building in a range over the prior couple of months, the US Dollar has recently moved into a bearish trend.
  • The USD found some element of support this morning at a familiar area, taken from around 97.50 on the chart.
  • This sets up for some interesting possible scenarios in a number of major pairs. In this article I look at EUR/USD, USD/CAD and USD/JPY; but the linked webinar shows a number of other USD-pairs, as well.
  • The USD will remain in focus as a couple of big data releases punctuate this week’s economic calendar, previewed here by our own Rich Dvorak.

US Dollar Builds into a Bearish Trend, Finds Support

After a riveting month of March the US Dollar went into a range, and that lasted for almost two full months as buyers and sellers swapped control and the currency meandered within a relatively tight space. That range has come under fire over the last week as sellers have further taken control, pushing the currency down to fresh two-month-lows, and bringing into play a prior support/resistance level of interest around the 97.50 spot on the chart.

As looked at in the webinar, this could be an area for possible counter-trend bounce, opening the door for resistance potential at 98.27, 98.82 or perhaps even the 100 level. Below, I look at a number of major currency pairs on either side of the matter in the USD.

US Dollar Four-Hour Price Chart

US Dollar Four Hour Price Chart

Chart prepared by James Stanley; USD on Tradingview

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EUR/USD Probes a Big Long-Term Zone

I’ve been following the 1.1212 price for quite some time in EUR/USD. It’s the 61.8% retracement of the 2000-2008 major move in the pair. Perhaps more importantly, there are a litany of prior examples of this price coming into play as both support and resistance.

More recently, another level close to that has come into play at around 1.1187. This is also a 61.8% retracement, but this is taken from the 2017-2018 major move; creating an element of confluence at this zone on the EUR/USD chart.

EUR/USD BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 3% -24% -14%
Weekly -2% -24% -16%
Current Retail Sentiment in EUR/USD
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Through last year, this support zone came into play multiple times and, in early-August, helped to hold lower-high resistance before the pair pushed down to fresh two-year-lows. With this zone re-entering the equation after a really strong run in EUR/USD (going along with that bearish trend in the USD), this could open up the possibility of reversal strategies in EUR/USD.

EUR/USD Four-Hour Price Chart

EURUSD Four Hour Price Chart

Chart prepared by James Stanley; EUR/USD on Tradingview

USD/CAD Breaks Down, Finds Support at 1.3500

I had looked at the bearish side of USD/CAD last week as the pair had built into a descending triangle formation. That short-side theme filled in very quickly this week, with the pair breaking down to fresh lows, eventually finding some support in the 1.3500 area on the chart.

USD/CAD BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -26% 19% -15%
Weekly -33% 43% -18%
Current Retail Sentiment in USD/CAD
Get My Guide

Of interest – there is some unfilled gap from the major move in March underneath that 1.3500 spot; but with the pair looking to be oversold on a near-term basis, resistance potential could re-open the door for bearish strategies. An area of interest exists around the 1.3600 level in the pair as there are two Fibonacci levels within close proximity.

USD/CAD Four-Hour Price Chart

USDCAD Four Hour Price Chart

Chart prepared by James Stanley; USD/CAD on Tradingview

USD/JPY Rip-Roaring Rally with Risk-On Mode

While USD weakness has been fairly pronounced in many pairings, USD/JPY would be a notable exception as Yen weakness has outpaced that recent bearish move in the USD. This may set up a scenario in which USD-strength can be sought, even as the currency is in its own generally bearish pattern; or, perhaps, that Yen weakness could be applied to another currency that has been strong, such as AUD to focus in on a really strong recent theme in AUD/JPY.

USD/JPY BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -19% -3% -13%
Weekly -11% 5% -5%
Current Retail Sentiment in USD/JPY
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At this point, it seems as though JPY weakness has some element of alignment with the continued risk-on scenario; and this could be helpful for currency strategies around both the USD and JPY.

USD/JPY Four-Hour Price Chart

USDJPY Four Hour Price Chart

Chart prepared by James Stanley; USD/JPY on Tradingview

--- 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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