US Dollar Talking Points:
- The US Dollar remains near fresh yearly highs and EUR/USD near lows as both markets have shown an extreme stretch over the past few weeks.
- Meanwhile GBP/USD holds within what’s been a consistent range, and USD/JPY retains clean bullish structure.
The US Dollar rally remains in force but the past few weeks have seen a slowing in the move, illustrated by upper wicks on the weekly chart. Along with that, we’ve seen odds for an October rate hike soften even despite some pointed and hawkish comments over the past couple days from Beth Hammack of the Cleveland Fed and Austan Goolsbee of the Chicago Fed.
For structure, there’s support at the Fibonacci level of 101.80 and if sellers can make a push below that, it’ll start to look like the currency is more ripe for a pullback, which can be extrapolated elsewhere, such as EUR/USD and GBP/USD.
US Dollar Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
The Euro is 57.6% of the DXY quote and as discussed in the webinar, the long-term prospects of the single currency remain in question given the large differences in the Eurozone economic backdrop. Flying French yields have brought that question back to the forefront and it makes the Euro as a less attractive medium for reserves, and I think that’s played a role, albeit minor at this point.
But – the sell-off has started to slow and CPI tomorrow can give this a push. At this point it looks like the EUR/USD pair wants to test a cross back from oversold territory on daily RSI, and as shown in the webinar, there’s a falling wedge formation shorter-term which points to the possibility of bullish reversal.
EUR/USD Daily Chart
Chart prepared by James Stanley; data derived from Tradingview
GBP/USD
If looking for USD-weakness, GBP/USD makes a stronger case, at this point. The pair has been lodged at range support for three weeks now, around the 1.3200 handle. And from the weekly chart, we can see a range that’s been in-place for pretty much all of 2026, so far.
GBP/USD Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/JPY
For USD-strength, USD/JPY makes for a more compelling case and if we’re in the scenario that presents stronger rate hike expectations with higher-than-expected inflation, that can support upside in the pair.
The primary issue is a theoretical cap to upside after the rather heavy-handed interventions, but that opens up a new realm of scenarios in breakout situations, particularly if the 160.00 level can come back into play. For now, there’s a similar build of price action that showed in August, when a series of higher-lows ran into that big figure, ultimately culminating in a strong sell-off brought upon by intervention threats.
Where this comes in for CPI tomorrow, is if we do get some element of pullback, support remains attractive for higher-low potential. There’s levels at 158.06 and 157.54, followed by the same 156.68 that’s been in-play multiple times already.
USD/JPY Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD/CAD
Similarly, the rally in USD/CAD has slowed over the past couple weeks. Sellers haven’t taken that next major step, until today, at least, and this highlights a significant level at the 1.4200 handle. A push below that and the weekly chart will start looking like an evening star formation, which opens the door for a push back towards the 1.4000 handle. The question is whether USD-weakness would be more attractive here than EUR/USD or GBP/USD above, and I don’t expect that to be the case at this point given what the chart is showing.
USD/CAD Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
