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

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

James Stanley, Senior Strategist

US Dollar Talking Points:

  • The USD has given back a portion of yesterday’s CPI-fueled gains.
  • This morning’s drive came from Jerome Powell’s statement ahead of his Congressional testimony, and indicates that the Fed is in no hurry to taper asset purchases or normalize policy.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

This week has seen another really strong inflation report essentially get shrugged off by market participants, and given the juxtaposition of this week’s economic calendar, that’s of little surprise. Yesterday’s 5.4% headline inflation print brought upon a strong US Dollar, with the currency surging up for another test in a key zone of resistance. But, the two days following that release, starting with this morning, saw Jerome Powell testify on Capitol Hill regarding the Fed’s current policy stance.

Powell was, in essence, able to talk markets down from the proverbial ledge less than 24 hours after that inflation data was released. In this morning’s prepared remarks, Powell indicated that the Fed is nowhere near tapering asset purchases or hiking rates, and this helped to give another shot-in-the-arm to the risk trade as the US Dollar pushed back to support.

To learn more about Fibonacci, check out DailyFX Education

US Dollar Two-Hour Price Chart

US Dollar Two Hour Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD: Resistance Potential for Bearish Continuation

On the long side of the US Dollar, EUR/USD remains attractive. I had looked into this setup earlier in the week and the pair then went on to set a fresh lower-low. As USD pulls back on the back of this morning’s Powell comments, EUR/USD has begun to retrace, and this opens the door for lower-high resistance potential in the 1.1850 area on the chart.

EUR/USD Two-Hour Price Chart

EURUSD Two Hour Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

GBP/USD for Bearish-USD Scenarios

On the short-side of the US Dollar, GBP/USD remains interesting. The pair pushed down to a fresh lower-low in early-July but, unlike many other major pairs, GBP/USD set a higher-low last week when the USD found a bid. This higher low also comes in at a key spot on the chart, around the 1.3750 psychological level, and this can keep the door open for upside, particularly if USD-weakness turns out to be more than a simple pullback.

GBP/USD Two-Hour Price Chart

GBPUSD Two Hour Price Chart

Chart prepared by James Stanley; GBPUSD on Tradingview

USD/CAD Hangs at Resistance – Can Bulls Hold 25?

There was a Bank of Canada rate decision this morning and the BoC tapered asset purchases again. This was expected ahead of the event though, illustrated by the fact that CAD has weakened since the announcement – but this does set up for an interesting scenario on longer-term charts.

USD/CAD is currently testing a big spot of resistance that runs from 1.2500-1.2622. Given this recent announcement from the BoC combined with another statement of dovishness from the FOMC, this can open up the downside of the pair and this can make USD/CAD as a candidate for strategies around USD-weakness.

USD/CAD Daily Price Chart

USDCAD Daily Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

AUD/USD Holding at .7500

On the long side of the USD, AUD/USD can be interesting. I had looked at this on Monday with focus on the .7500 psychological level as resistance. That resistance inflection has led to a higher-low so, the setup is still developing. But, if price action remains below the prior lower-high, around .7533, the door can remain open for bearish strategies in the pair.

To learn more about psychological levels, check out DailyFX Education

AUD/USD Four-Hour Price Chart

AUDUSD Four Hour Price Chart

Chart prepared by James Stanley; AUDUSD on Tradingview

--- Written by James Stanley, Senior 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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