EUR/USD Fibonacci Support Test, DXY 107.35 Resistance
The US Dollar has been putting in lower-lows and highs over the past month and EUR/USD the opposite, with each testing a key price level looked at in yesterday’s webinar.
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EUR/USD, USD, DXY Talking Points:
- This is a follow-up to yesterday’s webinar where I looked at both the U.S. Dollar and EUR/USD in pullback scenarios.
- The USD bounce started from the Fibonacci level of 106.61 but this morning tested resistance at 107.35.
- Going along with that, EUR/USD tested a key zone of confluent Fibonacci levels, at the 1.0400 handle that was previously in-play as resistance.
- To review that webinar, the following article includes the archived video. And if you’d like to attend the next, click here for registration information.
The US Dollar has been on a pattern of lower-lows and highs since last January 13th, when the current high on DXY had formed. That high in the Dollar coincides with the low in SPX, taken from the day that the election gap was filled.
While the initial pullback was helped along by below-expected CPI print released in January, more recent inflation data has been fairly strong, as last week saw headline CPI move back to 3.0% on a year-over-year basis, and both headline and Core CPI beat the expectation. But that didn’t matter much in USD price action as the currency dipped down to a fresh low and on Thursday, crossed a key price at 107.35, which was the 2023 swing high.
Helping to drive the move was the reciprocal tariff announcement, or perhaps more accurately, the timing of when that tariff might actually come into effect. With an April 1st date, markets showed a sense of relief as USD sold off and equities rallied, and those themes have largely hung around since.
The USD weakness theme remained into the end of the week, with a massive longer-term level coming into play in DXY at 106.61. That’s the 38.2% retracement of the 1985-2008 major move in the USD and, so far, that’s helping to set the 2025 low. And as I had looked at in yesterday’s webinar, I wanted to track the bounce for a move up to test a possible area of lower-high resistance at 107.35 in DXY.
U.S. Dollar Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
With the Euro making up 57.6% of the DXY basket, it’s logical to look for a move in one to be mirrored by the other. And as we saw EUR/USD pressed towards lows at 1.0200 in early-February, driven by the threat of tariffs on Europe, more recent price action has been going against that grain as tariff threats haven’t seemed as daunting. Last week’s reciprocal tariff announcement came along with both USD weakness and EUR/USD strength. The USD finally budged below 107.35 on the back of that announcement, and EUR/USD broke-out above the 1.0400 confluent Fibonacci zone.
That rally ran into last Friday, which was right around the time that DXY started its test of the Fibonacci level at 106.61. And as USD bounced, EUR/USD dropped from the 1.0500 handle, with the move continuing into trade earlier this morning.
At this point, that zone of Fibonacci levels is helping to bring a bounce to EUR/USD, and in the above video, I looked at some shorter-term context to track higher-high and low structure that could lead-in to a larger reversal theme.
EUR/USD Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Strategist
EUR/USD, USD, DXY Talking Points:
- This is a follow-up to yesterday’s webinar where I looked at both the U.S. Dollar and EUR/USD in pullback scenarios.
- The USD bounce started from the Fibonacci level of 106.61 but this morning tested resistance at 107.35.
- Going along with that, EUR/USD tested a key zone of confluent Fibonacci levels, at the 1.0400 handle that was previously in-play as resistance.
- To review that webinar, the following article includes the archived video. And if you’d like to attend the next, click here for registration information.
The US Dollar has been on a pattern of lower-lows and highs since last January 13th, when the current high on DXY had formed. That high in the Dollar coincides with the low in SPX, taken from the day that the election gap was filled.
While the initial pullback was helped along by below-expected CPI print released in January, more recent inflation data has been fairly strong, as last week saw headline CPI move back to 3.0% on a year-over-year basis, and both headline and Core CPI beat the expectation. But that didn’t matter much in USD price action as the currency dipped down to a fresh low and on Thursday, crossed a key price at 107.35, which was the 2023 swing high.
Helping to drive the move was the reciprocal tariff announcement, or perhaps more accurately, the timing of when that tariff might actually come into effect. With an April 1st date, markets showed a sense of relief as USD sold off and equities rallied, and those themes have largely hung around since.
The USD weakness theme remained into the end of the week, with a massive longer-term level coming into play in DXY at 106.61. That’s the 38.2% retracement of the 1985-2008 major move in the USD and, so far, that’s helping to set the 2025 low. And as I had looked at in yesterday’s webinar, I wanted to track the bounce for a move up to test a possible area of lower-high resistance at 107.35 in DXY.
U.S. Dollar Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
With the Euro making up 57.6% of the DXY basket, it’s logical to look for a move in one to be mirrored by the other. And as we saw EUR/USD pressed towards lows at 1.0200 in early-February, driven by the threat of tariffs on Europe, more recent price action has been going against that grain as tariff threats haven’t seemed as daunting. Last week’s reciprocal tariff announcement came along with both USD weakness and EUR/USD strength. The USD finally budged below 107.35 on the back of that announcement, and EUR/USD broke-out above the 1.0400 confluent Fibonacci zone.
That rally ran into last Friday, which was right around the time that DXY started its test of the Fibonacci level at 106.61. And as USD bounced, EUR/USD dropped from the 1.0500 handle, with the move continuing into trade earlier this morning.
At this point, that zone of Fibonacci levels is helping to bring a bounce to EUR/USD, and in the above video, I looked at some shorter-term context to track higher-high and low structure that could lead-in to a larger reversal theme.
EUR/USD Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Strategist
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