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

US Dollar

The daily and weekly charts of the US Dollar retain bullish potential and given the continued tension in the Middle East I think it’s clear what drives that scenario. The knock-on effect of that is USD/JPY, and whether the BoJ will be ordered to intervene in effort of knocking the pair back-below the 160.00 handle. Earlier in the week there were more intervention threats out of Japan and that did bring a pullback, but since then, bulls have pushed price right back up to resistance.

In the USD, there’s an ascending triangle formation very similar to the one that had built in February leading into the March breakout. The resistance line-in-the-sand is around the 100-handle, which has been bend without break kind of scenario of late.

US Dollar Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

USD Shorter-Term

For USD bears, it’s the shorter-term build of lower-lows and highs that they’d likely want to focus on. For now, there’s support bouncing from the bullish trendline that held the lows in late-February in DXY, and resistance is playing at a familiar zone between 99.48-99.68, which was resistance after the initial breakout in early-March before coming in as support a couple weeks later.

US Dollar Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/USD

The largest component of the DXY basket is in a similar contradictory state between daily and four-hour charts. For EUR/USD bulls, it’s the fundamental divergence that I think stands out as this fall in the pair accompanied a fast rise in European rate expectations into Central Bank week. There’s been a build of support on a short-term basis, mirroring the lower-lows and lower-highs of DXY above, and this is what EUR/USD bulls are likely going to want to focus on, for now.

But, from the daily I think it’s simple to consider this as a bearish scenario given that there’s a continued tug of war around what can be considered a lower-high.

EUR/USD Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

EUR/USD Shorter-Term

The four-hour chart shows a grinding backdrop of recent higher-highs and lows and notably that sequencing has continued since the ECB rate decision last week. But, bulls remain cautious as pushes up to higher-highs haven’t exactly led to strong breakout themes so it seems as though this situation is still awaiting a catalyst or driver.

EUR/USD Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

GBP/USD

For USD-weakness, I still prefer GBP/USD, and the recent pullback from the bearish trend illustrates a few items that I think keeps that theme of interest. While EUR/USD hasn’t yet re-tested the March 10^th high, substantiating a lower-high on the daily chart, GBP/USD has come closer to that, which highlights a deduction of greater strength in Sterling versus the Euro.

The daily chart here, while not quite in a bullish reversal state, has a series of recent higher-lows to go along with that test back above the 1.3400 handle.

GBP/USD Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

USD/JPY

USD/JPY is making another push back up towards the 160.00 level and earlier this week we heard comments from Japan’s top currency diplomat that threatened intervention. That brought a pullback on Monday but not much else, and prices are now back to the same level they were at after the weekly open around when those comments hit the wire.

If we do see a 160.00 test I think we could see an intervention. The bigger question is whether it would work or, like in April of 2024, if that was merely a pullback that drew bulls in after a support test.

But, perhaps more importantly, a pullback in the crowded USD/JPY backdrop could bring with it a broader swell of USD-weakness, such as we saw in late-January which helped EUR/USD to pop above the 1.2000 handle while going into overbought territory on daily RSI.

USD/JPY Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Market Analyst, Global Macro