Q2 USD Price Action Setups: EUR/USD, GBP/USD, Gold, SPX

USD, U.S. Dollar Talking Points:

• Despite starting the year in a strong bullish trend, the first quarter of the year was one of weakness for the USD and DXY.
• The large push in FX majors happened in the first week of March as recession fears in the U.S. took over, helped along by the tariff topic which looks to be moving into a new stage with tomorrow’s ‘Liberation Day.’
• In the webinar I went over numerous markets while pointing to gold as a possible indication of markets trying to look around the next corner, anticipating economic stimulus later this year.

It was a rough Q1 for the U.S. Dollar after the currency put in a strong push through Q4 of last year. What initially started as a doji in January soon started to turn-lower in February; but it was the aggressive sell-off in early-March that dominated the quarterly move for DXY. That move was accompanied by one of the stronger breakouts ever seen in EUR/USD, helped along by the injection of recession fears in the United States. That move has since stalled in the USD with the past three weekly bars showing some respect of support at the early-March lows.

I looked at turn potential in the USD (and EUR/USD) ahead of the FOMC rate decision. That started to play out for the next week, until EUR/USD hit a major area of support that’s since come into hold the lows (and which was highlighted in the following webinar last week).

 

US Dollar Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/USD

 

It was perhaps a surprisingly strong quarter for EUR/USD in Q1, as the currency rallied even with a relatively weak economic backdrop in Europe that may soon see even more rate cuts. As highlighted in the webinar, this seems somewhat similar to last Q3, when EUR/USD was holding near 1.1200 even with lacking growth in the Eurozone.

But, at this point, bulls can’t be ruled against entirely in EUR/USD as the pair has so far held support at the 200-day moving average following last week’s test.

As highlighted in this week’s EUR/USD forecast, this can be construed as a tale of two trends, with the broader bullish trend retaining potential until bears are able to take out support potential at prior resistance, around the 1.0611 or 1.0530 areas. On a shorter-term basis, however, lower-high resistance keeps the door open for a run down towards those larger, bigger picture support zones.

At this point, key support remains at 1.0730-1.0750, marked by that 200-dma that helped to set the lows last week.

EUR/USD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

GBP/USD

 

For USD-weakness scenarios, I’m still of the mind that GBP/USD could be more attractive than EUR/USD. I had outlined that logic in webinars over the past few weeks and I had talked about the British Pound in greater depth in last week’s article.

The updated chart is below, and since then we’ve had a continued hold of support at a prior Fibonacci level around 1.2881.

 

GBP/USD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

Gold (XAU/USD)

 

Gold has been in a parabolic trend of late, and that led to another fresh all-time-high this morning. These types of moves bring on a few different types of questions, mainly ‘can it continue’ and ‘what’s behind the push?’

I tried to answer the second question in this webinar and for the first, I have to default to the answer of ‘I have no evidence to suggest otherwise.’

With that said, chasing the move-higher is still dangerous as we’re seeing from today’s pullback. There’s no simple ways to treat the move other than trying to be patient and letting the dust settle, but for those that are trying to push short-term momentum setups, prior resistance has left quite a bit of structure to work off of. The 3112 level is now in-play after a hold above $3100. The $3125 level is now resistance potential, but for bulls trying to impart a topside bias, they can use that to look for pullbacks to higher-low in aim of working continuation scenarios.

If those don’t hold, if we do see greater profit taking take over, there still hasn’t been any significant support tests at prior resistance of $3050-3057.50.

Gold 30-Minute Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

SPX

 

It was also a rough Q1 for U.S. equities as the S&P 500 showed its worst quarterly performance since 2022. Even with expectations for rate cuts later in the year, the ongoing dynamic around tariffs seemed to take on a negative impact as soon as recession fears entered the equation earlier in March.

The bulk of the quarterly loss showed in the second-half of the quarter. There’s one more support zone in-play from my 2025 Forecast after the ‘s1’ zone gave a boost to fresh ATHs in January, and that zone runs from 5340-5402.

At this point, the ‘s2’ zone is showing as resistance and the bottom of that zone at 5638 was in-play at the time of the webinar, helping to hold the highs for the index.

S&P 500 Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist