USD Tests a Big Spot, Gold Rally Continues, EUR/USD 1.0500

Gold, USD, EUR/USD Talking Points:

• The U.S. Dollar ran into a long-term Fibonacci level on Friday and that is so far helping to set the low.
• From the weekly chart, this Fibonacci level is within a support zone as taken from prior resistance. Longer-term USD charts are starting to indicate that a top may be in, but key will be sellers defending lower-high resistance to keep bearish strategies in order.
• EUR/USD has so far held 1.0500 as resistance but the big question now (and pertinent to USD bearish continuation scenarios) is whether the pair can put in a breakout. Higher-low support potential exists down to the confluent Fibonacci zone around the 1.0400 zone.
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Video

 

The U.S. Dollar ran into a long-term Fibonacci level at 106.61 yesterday. I had highlighted this in the weekend video on the USD and I updated the look at today’s webinar. There’s more reference in the current area, which I’ll expand on below. Notably from the monthly chart below, DXY is working on a non-completed evening star formation after last month’s doji has been followed through with weakness so far in February.

 

U.S. Dollar Monthly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

USD Weekly

 

This current support is also of note from the two-year range that was broken in the post-election rally last year. The top-end of that zone at 107.35 has already had impact, helping to set support for three weeks until last week’s breakdown.

That breakdown was driven by tariff dynamics as Trump delayed reciprocal tariffs until April 1^st and this bears some potential for the week ahead as there’s also the possibility of a tariff announcement on autos. If that comes out, and there’s a date closer than April 1, that could compel additional USD strength.

But the Dollar is at a big spot right now as price has bounced from the bottom of support as taken from prior resistance.

 

U.S. Dollar Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

USD Daily

 

From the daily chart it’s been a pensive month of February so far, but there’s been a pattern of lower-lows and highs over the last month after the currency set a high on January 13^th. The current bounce from 106.61 appears countertrend, which opens the door for a resistance test at 107.35 which is the top of the longer-term zone looked at above.

The question at that point is whether sellers have interest in continuing the lower-highs and lows sequencing, and the answer to that could very well have some relation to EUR/USD, which I’ll look at below.

 

US Dollar Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

 

Gold

 

Gold is now working on its eight consecutive green week. While last Friday’s sell-off was aggressive, the weekly bar remained in the green as price couldn’t trade below the 2860 weekly open. Support held into last week’s close at 2877 which was a prior swing-high, and bulls have been going to work ever since.

As I said in the above video, I have little interest on the short side of anything in gold. But, that said, I’d also be cautious of chasing especially above the 2900 level. At this point, I’m tracking recent structure in the aim of higher-low support. Price is currently above a prior resistance level of 2929 but there’s another spot at 2922 that’s of interest for support. And below that, 2915 is also of interest. Below that, the prior resistance zone at 2905-2907 has already set a short-term low today but that could be in the equation, as well.

 

Gold AD

 

Gold Four-Hour Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/USD

 

EUR/USD took a hit at the open two weeks ago, following a weekend comment from President Trump regarding tariffs that were on the way. But, notably, sellers couldn’t re-test the 1.0200 Fibonacci level that had held the lows on January 13^th, when the USD set its current high.

And then later that week, the announcement that reciprocal tariffs were on the way helped to form another iteration of resistance, with prices softening from 1.04000.

But that reciprocal tariff announcement last week seemed to lack interest for USD-bulls, as the April 1^st implementation date made it look like more of a negotiation tactic versus an actual desire to add tariffs.

That helped the pair to finish the week with a 1.0500 resistance test, and this one syncs quite well with the USD above. Prices have pulled back a bit to go along with the 106.61 support bounce in DXY, but the question now is the mirror image of whether sellers defend 107.35 in DXY.

In EUR/USD, it’s the confluent zone of Fibonacci levels around 1.0400 that’s of interest for higher-low support. A hold there keeps the door open for another 1.0500 test and that third test brings with it breakout potential.

Next resistance can be sought at 1.0533 and then the 1.0611 Fibonacci level. All of these Fibonacci levels were looked at as example in the Fibonacci article from a couple weeks ago.

 

EURUSD AD

 

EUR/USD Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist