Skip to Content
News & Analysis at your fingertips.
Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CHF, USD/JPY

US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/CHF, USD/JPY

What's on this page

US Dollar Talking Points:

USD Forecast
USD Forecast
Recommended by James Stanley
Get Your Free USD Forecast
Get My Guide

It’s been a very busy past 18 hours across markets and technically it’s not over yet. Sure, we may have already heard a chorus call of hawkishness from global central banks but at this point price action is still running on those themes and we don’t quite know what the net is going to look like.

To be sure, there was injection of a considerable amount of new information and that’s already led to some key market moves. But, it’s the price action in the coming days that will denote which trends may have staying power and which were quick flashes in the pan. Perhaps most noticeably, the risk trade took a nasty turn yesterday just after the conclusion of the FOMC press conference. Stocks pushed to fresh two-month-lows overnight and are now trying to grasp at support.

In the US Dollar, however, there was a very sharp breakout that showed even before yesterday’s FOMC announcement, with continuation that ran through the Asian session and into the Euro open. That’s also around the time that the Ministry of Finance in Japan announced intervention in USD/JPY, which stepped on the bullish USD trend and pushed a pullback, with support showing up around prior resistance.

US Dollar Four-Hour Chart


Chart prepared by James Stanley; USD, DXY on Tradingview

USD Support Potential

This week’s breakout in the USD has already cleared through a couple of key areas. There was a build of resistance around 110 which led into another test of resistance at 110.24 which started to give way ahead of the FOMC meeting.

Each of those spots of prior resistance become potential support, and there’s also a bullish trendline that was previously in-use to help set up the ascending triangle that led into the 110.24 breakout.

US Dollar Two-Hour Price Chart


Chart prepared by James Stanley; USD, DXY on Tradingview


For the past couple of months I’ve been talking about the EUR/USD parity scenario. The fundamental backdrop around Europe remains pretty negative, and the trend in EUR/USD is already well-built. And parity is a major psychological level that ideally should put up some fight before sellers are able to leave it behind. And I’ve pointed out more times than I can count, when EUR/USD was surging higher in 2002 as the single currency was gaining widespread and global acceptance, parity took about six months to finally leave behind.

Parity is somewhat of the ultimate psychological level and it started to come back into play in July. And through August and early-September, it had bent but hadn’t quite broken, as prices were above parity just earlier this week.

But, there was also a building bearish narrative that started to make that support look vulnerable, and yesterday during FOMC it finally gave way.

Yesterday saw sellers take out support to set a fresh 19-year-low in the EUR/USD pair.

EUR/USD Four-Hour Chart


Chart prepared by James Stanley; EURUSD on Tradingview

Now that a support break is in on EUR/USD and the falling wedge formation looks invalidated – the big question is whether sellers will run. The door appears open for such, but first there needs to be a show of lower-high resistance to keep the ball rolling on fresh lower-lows and lower-highs.

From the two-hour chart below, we can already see some seller defense of the .9900 handle, which quite a bit of resistance showing in a prior spot of short-term support, taken from around .9862-.9876. If bulls can muster a deeper pullback, the .9950 area remains of interest as well for lower-high resistance themes.

EUR/USD Two-Hour Price Chart


Chart prepared by James Stanley; EURUSD on Tradingview


The Bank of England just hiked rates by 50 basis points. GBP/USD has put in a bounce from fresh 37-year-lows but sellers have remained pretty active here, holding resistance at prior support, around the 1.1350 area.

GBP/USD Two-Hour Chart


Chart prepared by James Stanley; GBPUSD on Tradingview


I don’t often touch on USD/CHF and there’s a few reasons for that. But, of late, the currency has been on the move and this morning saw the Swiss National Bank put in a 75 bp hike, which has brought in some volatility that’s of interest to me.

That hike brought the dreaded ‘rate hike sell-off’ in the currency but this has pushed price right up to a key zone of resistance, taken from around the .9800 handle up to around .9850. A hold here can keep the door open for reversal scenarios at some point, but if we do see clearance above the .9900 psychological level, the door quickly opens for a parity test there, as well.

The Fundamentals of Breakout Trading
The Fundamentals of Breakout Trading
Recommended by James Stanley
The Fundamentals of Breakout Trading
Get My Guide

USD/CHF Daily Price Chart


Chart prepared by James Stanley; USDCHF on Tradingview


I’ve saved the big one for last…

I had talked about this yesterday as the Bank of Japan rate decision after FOMC was seemingly ignored by much of the financial media. But, earlier in the week Japanese inflation spiked to a fresh 31-year high and while at relatively subdued levels compared to the rest of the world, it’s a massive change for the nation of Japan. And there’s now a series of cautionary tales of the problems that can come about from central banks ignoring inflation.

Nonetheless, at last night’s BoJ meeting, Governor Kuroda said ‘you can expect that there will be no change to our forward guidance for about two to three years.’

This was widely read to mean that the BoJ wasn’t going to intervene – and USD/JPY responded by jumping up to another fresh 24-year-high, crossing the 145 psychological level.

That did not last for long, however, as a couple hours later the Ministry of Finance announced that Japan would intervene by buying Yen and selling US Dollars for the first time since 1998. The Bank of Japan then executes the move, and this created a large pullback in JPY trends in the European session which is still getting priced-in as of this writing.

USD/JPY Four-Hour Chart


Chart prepared by James Stanley; USDJPY on Tradingview

USD/JPY Moving Forward

Perhaps the most important part of this dynamic is that we now know where the Finance Ministry has tried to draw a line-in-the-sand, and I’m looking at the 145 level as that price.

And the thing about interventions – they don’t always ‘work.’ It’s a dangerous spot for a central bank to be in, particularly when speculators know what they’re trying to protect. And, at this point, given the positive carry behind USD/JPY, Japan is almost trying to fight the tide of capital flows which rarely seems to work out well.

This helps to explain why we’ve already seen such a strong bounce in USD/JPY, even as the Japanese Government has started to take an approach to work against it.

How to Trade USD/JPY
How to Trade USD/JPY
Recommended by James Stanley
How to Trade USD/JPY
Get My Guide

USD/JPY 30-Minute Price Chart


Chart prepared by James Stanley; USDJPY on Tradingview


If we are seeing a legitimate reversal in Yen-trends, there may be greener pastures away from the US Dollar, such as EUR/JPY or GBP/JPY – focusing those Yen-themes against currencies that aren’t backed by yields as high as the US Dollar and, in-turn, looking to pick on the lower carry rates that may suppress Yen-weakness scenarios on continued bounces.

--- Written by James Stanley, Senior Strategist, & Head of DailyFX Education

Contact and follow James on Twitter: @JStanleyFX

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