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

US Dollar Talking Points:

  • US Dollar strength has so far held through the first few weeks of the New Year.
  • With USD bulls hold support above the 90.00 big figure on DXY, can they continue to drive the near-term trend?
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, or the falling wedge shown in USD, check out our Finance Prop Education section.

The US Dollar is at a fairly precarious spot on the chart and the currency hangs in an apparent limbo as neither bulls nor bears have been able to take control so far this week.

There was the possibility of a bearish formation yesterday, but that did not complete. As looked at in yesterday’s webinar, the DXY was threatening to close with an evening star formation. Such patterns are often approached with the aim of bearish reversals, and as looked at in yesterday’s webinar, the US Dollar would need to close yesterday’s price action below a value of around approximately 90.47. There is, however, a big spot of support at 90.49 and this helped to hold support into yesterday’s close. This level comes from the 14.4% Fibonacci retracement of the 2017-2018 major move, and this price has been in-play since showing as support in early-December. One day later and price action is still huddled around this key spot on the chart, with no clear directional biases yet showing to use for near-term strategies.

To learn more about what makes an evening star pattern, join us in Finance Prop Education

This can, however, allow for traders to focus on prevailing biases in other currencies to open the door to strategy potential in major pairs, which is looked at a little lower in this article. On the below chart, two elements are highlighted: The falling wedge that had built in from the Presidential Election into the end of the year, and the negated evening star pattern from yesterday is highlighted in red.

USD Forecast

USD Forecast

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US Dollar Daily Price Chart

US Dollar Daily Price Chart

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD Resistance Check at Prior Support

For long-USD strategies, EUR/USD could be appealing. The pair built in a rising wedge towards the end of last year, which will often be approached with the aim of bearish reversals. And there remains some potential there as prices have been heading lower so far in 2021 trade.

Most recently, EUR/USD price action pushed below a big zone of confluent support, spanning from 1.2134-1.2167. This zone was resistance in early-December, support later in the month and has become resistance once again, keeping the door open for short-side continuation scenarios. For follow-through support, the psychological level at 1.2000 could remain an attractive point of reference.

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EUR/USD Daily Price Chart

EURUSD Daily Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

USD/CAD Digs in to Big Support

USD/CAD is currently testing a long-term level of support at 1.2622: This is the 50% marker of the 2002-2007 major move but, for the past three weeks, its helped to hold back the lows from a plunging sell-off that’s held through the start of a new year.

That support began to give way earlier today, but buyers quickly jumped in to pull prices back-above. So, for now, it remains interesting on the long side for support defense plays but, if this gives way, the next item of support appears to be around 1.2500, and this can keep the door open for short-side breakdown potential in the pair.

USD/CAD Weekly Price Chart

USDCAD Weekly Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

AUD/USD Re-Tests the Big Figure .7750

I had also looked at this one in yesterday’s webinar, but there’s some interesting potential in AUD/USD at the moment. The pair has re-engaged with the psychological level around .7750, and this is a price that’s had some historical pull on the pair, helping to set resistance for over a year from April 2016 through April of 2017. This price came back into play in the early portion of 2021 but, so far, buyers have been unable to leave it behind.

This does keep open the possibility of near-term breakout potential, but the bigger question is whether buyers will be able to clear the descending trendline that’s recently begun to build. And, if it can’t, and if .7750 can hold the highs, then the next look moves towards breakdown potential with focus on a support test of the .7500 big figure.

To learn more about psychological levels, join us in Finance Prop Education

AUD/USD Four-Hour Price Chart

AUDUSD Four Hour Price Chart

Chart prepared by James Stanley; AUDUSD on Tradingview

— Written by James Stanley, Strategist for Finance

Contact and follow James on Twitter: @JStanleyFX

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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