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US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/JPY, AUD/USD
It’s been another impressive week for the US Dollar and already, DXY is showing overbought RSI readings after a re-test of the 200-day moving average.
The US Dollar extended its bullish run for a third week, with resistance finally showing at the 200-day moving average.
The rally in the USD has been brisk and daily RSI has already pushed into overbought territory. The big question now is how bullish buyers will remain to be next week amidst next week’s Fed-speak, which up to this point, has leaned dovish even considering strong US data.
When I looked at that as it took place in late-August, I shared the fact that rectification from those conditions could take time, as there was a heavy trend that was likely to see sellers try to continue the move; but also, a built-in bearish trend that would likely have bears looking to take profits, especially as the move started to stall.
That led to the build of a falling wedge formation which is often approached with aim of bullish reversal. And to be sure, bears had multiple opportunities to punch the trend-lower last month, but continually failed to do so. At the FOMC rate cut, the USD set a fresh low and then bounced. A couple weeks later, another fresh low saw similar strength come-in. And then on the first day of Q4 trade, bulls prodded the breakout, and, to this point, they haven’t really looked back much.
Some element of resistance finally came into play on Thursday of this week when DXY tested its 200-day moving average. That has so far held through Friday trade and at this point it seems like we’re looking at the first legitimate pullback in the pair since the breakout got started a few weeks ago.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD Strategy Across FX Majors
Just because USD is overbought and RSI is showing a push through the 70-level, it doesn’t mean the pullback has to deepen. This does remain a difficult area to chase the USD-higher, but traders should remain on-guard as so far this quarter the currency has put in a massive bullish move and that could show continuation through next week.
Of course, one of the larger factors at-play will be the Euro and rate cut expectations from the ECB, which helped to extend the trend over the past week. Perhaps the bigger question for the matter is weakness in the DXY’s largest constituent of the Euro, and Christine Lagarde has a couple of important speeches on the economic calendar for next week. But, for those looking at deeper pullback scenarios, there could be greener pastures elsewhere, such as GBP/USD or perhaps AUD/USD, which I’ll look at below.
For USD context, we’ve already seen a move down towards a prior resistance zone of 103.32-103.46. If that holds through early-trade next week, I’d take that as an impressive sign from bulls, which could point to more bearish potential in EUR/USD.
If the pullback does deepen below that zone, 103.00 comes up as the next area of interest, followed by another zone of confluent Fibonacci levels around the 102.55 level.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
It was the Euro that really stuck out to me in September as the Eurozone economy wasn’t exactly a bastion of strength compared to the US. But EUR/USD showed a strong trend in the first two months of Q3 as the pair rose by almost 500 pips; and it was the 1.1200 level where that move had started to stall.
Bulls defended 1.1000 ahead of the September ECB rate cut and price pushed right back to the 1.1200 level, but after two weeks of failing to break-through, sellers finally took-over around the Q4 open.
There’s only been one other instance of that so far this year, and it was right around the current 2024 low. But, again, this does not mean that the sell-off is finished and instead, it points to pullback potential which can bring lower-high resistance back into the equation.
For that – both 1.0900 and the 1.0943-1.0960 zone are attractive. If those get traded through, I’d expect a big test at 1.1000 and preferably, sellers could defend that level with a lower-high, inside of the prior week swing-high of 1.0997, to continue showing an element of control.
When USD-weakness was stalling in September as EUR/USD was stalling near resistance, GBP/USD was rushing up to fresh two-year highs. Resistance eventually showed at a Fibonacci level plotted at 1.3434 and as USD strength came online in Q4, GBP/USD bulls ducked for cover.
But there’s an interesting deviation here: When EUR/USD saw support above 1.1000 in September, leading to a re-test of 1.1200, GBP/USD had a similar support bounce above the 1.3000 handle. Bulls held the low two pips above and then drove into a fresh two-year high, even as EUR/USD was stalling.
That 1.3000 level was tested again this week and sellers weren’t able to make much fresh ground below, leading to a bounce. At this point, resistance has shown around prior support, so I can’t quite say that price action has turned bullish. But, there could be scope for that in early-trade next week.
From the four-hour chart we can see buyers attempting to take a larger role here and, shorter-term, a higher-high can be argued. The question now is whether a higher-low point of support can show up which can then begin to open the door for reversal strategies from shorter time frames.
Given the prior interplay with the 1.3000 level, that remains of interest for such. But there’s also the prior short-term swing high around 1.3025 that could serve a similar purpose.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley, GBP/USD on Tradingview
AUD/USD
On a similar note, when USD-weakness was in-play during Q3 AUD/USD had shown a strong bullish move, rising to a fresh yearly high before bulls backed away from a test of the .7000 big figure. With USD-strength coming back online, a strong pullback showed and this week AUD/USD put in a bounce from a big spot of support. The level of .6664 is the 50% mark of last year’s bullish move and it was the 23.6% retracement that helped to hold the highs late last month.
Like GBP/USD above, buyers have been attempting to grind the move-higher and at this point, a case can be argued for short-term higher-highs. If we do see a larger USD pullback, to perhaps the 102.55 zone or lower, the topside of AUD/USD could be of attraction. The next spot of resistance overhead is around the .6750 psychological level after which the 38.2% retracement of the above-mentioned Fibonacci setup comes back into the picture at .6681.
I’ve written a lot about USD/JPY over the past week, with the longer-term importance of the 150-151.95 zone very much in the conversation. Given the fact that the US is still widely-expected to cut rates, perhaps a bit later than previously expected, there would be a diminishing argument for the long side of the carry trade. I’m of the mind that much of what we’ve seen in the bullish move over the past month, since the September stall at the 140.00 handle, has been short cover after a violent move in July and August. Others have proclaimed that the carry trade is returning but given that expectation for tightening divergence between US and Japanese rates, that argument doesn’t make a lot of sense to me.
Nonetheless, next week will be telling as the pair has now re-engaged with the same zone that elicited large reversals in Q4 each of the past two years.
The US Dollar extended its bullish run for a third week, with resistance finally showing at the 200-day moving average.
The rally in the USD has been brisk and daily RSI has already pushed into overbought territory. The big question now is how bullish buyers will remain to be next week amidst next week’s Fed-speak, which up to this point, has leaned dovish even considering strong US data.
I look into each of these markets every Tuesday in the live webinar and you’re welcome to join the next installment: Click here for registration information.
When I looked at that as it took place in late-August, I shared the fact that rectification from those conditions could take time, as there was a heavy trend that was likely to see sellers try to continue the move; but also, a built-in bearish trend that would likely have bears looking to take profits, especially as the move started to stall.
That led to the build of a falling wedge formation which is often approached with aim of bullish reversal. And to be sure, bears had multiple opportunities to punch the trend-lower last month, but continually failed to do so. At the FOMC rate cut, the USD set a fresh low and then bounced. A couple weeks later, another fresh low saw similar strength come-in. And then on the first day of Q4 trade, bulls prodded the breakout, and, to this point, they haven’t really looked back much.
Some element of resistance finally came into play on Thursday of this week when DXY tested its 200-day moving average. That has so far held through Friday trade and at this point it seems like we’re looking at the first legitimate pullback in the pair since the breakout got started a few weeks ago.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD Strategy Across FX Majors
Just because USD is overbought and RSI is showing a push through the 70-level, it doesn’t mean the pullback has to deepen. This does remain a difficult area to chase the USD-higher, but traders should remain on-guard as so far this quarter the currency has put in a massive bullish move and that could show continuation through next week.
Of course, one of the larger factors at-play will be the Euro and rate cut expectations from the ECB, which helped to extend the trend over the past week. Perhaps the bigger question for the matter is weakness in the DXY’s largest constituent of the Euro, and Christine Lagarde has a couple of important speeches on the economic calendar for next week. But, for those looking at deeper pullback scenarios, there could be greener pastures elsewhere, such as GBP/USD or perhaps AUD/USD, which I’ll look at below.
For USD context, we’ve already seen a move down towards a prior resistance zone of 103.32-103.46. If that holds through early-trade next week, I’d take that as an impressive sign from bulls, which could point to more bearish potential in EUR/USD.
If the pullback does deepen below that zone, 103.00 comes up as the next area of interest, followed by another zone of confluent Fibonacci levels around the 102.55 level.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
It was the Euro that really stuck out to me in September as the Eurozone economy wasn’t exactly a bastion of strength compared to the US. But EUR/USD showed a strong trend in the first two months of Q3 as the pair rose by almost 500 pips; and it was the 1.1200 level where that move had started to stall.
Bulls defended 1.1000 ahead of the September ECB rate cut and price pushed right back to the 1.1200 level, but after two weeks of failing to break-through, sellers finally took-over around the Q4 open.
There’s only been one other instance of that so far this year, and it was right around the current 2024 low. But, again, this does not mean that the sell-off is finished and instead, it points to pullback potential which can bring lower-high resistance back into the equation.
For that – both 1.0900 and the 1.0943-1.0960 zone are attractive. If those get traded through, I’d expect a big test at 1.1000 and preferably, sellers could defend that level with a lower-high, inside of the prior week swing-high of 1.0997, to continue showing an element of control.
When USD-weakness was stalling in September as EUR/USD was stalling near resistance, GBP/USD was rushing up to fresh two-year highs. Resistance eventually showed at a Fibonacci level plotted at 1.3434 and as USD strength came online in Q4, GBP/USD bulls ducked for cover.
But there’s an interesting deviation here: When EUR/USD saw support above 1.1000 in September, leading to a re-test of 1.1200, GBP/USD had a similar support bounce above the 1.3000 handle. Bulls held the low two pips above and then drove into a fresh two-year high, even as EUR/USD was stalling.
That 1.3000 level was tested again this week and sellers weren’t able to make much fresh ground below, leading to a bounce. At this point, resistance has shown around prior support, so I can’t quite say that price action has turned bullish. But, there could be scope for that in early-trade next week.
From the four-hour chart we can see buyers attempting to take a larger role here and, shorter-term, a higher-high can be argued. The question now is whether a higher-low point of support can show up which can then begin to open the door for reversal strategies from shorter time frames.
Given the prior interplay with the 1.3000 level, that remains of interest for such. But there’s also the prior short-term swing high around 1.3025 that could serve a similar purpose.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley, GBP/USD on Tradingview
AUD/USD
On a similar note, when USD-weakness was in-play during Q3 AUD/USD had shown a strong bullish move, rising to a fresh yearly high before bulls backed away from a test of the .7000 big figure. With USD-strength coming back online, a strong pullback showed and this week AUD/USD put in a bounce from a big spot of support. The level of .6664 is the 50% mark of last year’s bullish move and it was the 23.6% retracement that helped to hold the highs late last month.
Like GBP/USD above, buyers have been attempting to grind the move-higher and at this point, a case can be argued for short-term higher-highs. If we do see a larger USD pullback, to perhaps the 102.55 zone or lower, the topside of AUD/USD could be of attraction. The next spot of resistance overhead is around the .6750 psychological level after which the 38.2% retracement of the above-mentioned Fibonacci setup comes back into the picture at .6681.
I’ve written a lot about USD/JPY over the past week, with the longer-term importance of the 150-151.95 zone very much in the conversation. Given the fact that the US is still widely-expected to cut rates, perhaps a bit later than previously expected, there would be a diminishing argument for the long side of the carry trade. I’m of the mind that much of what we’ve seen in the bullish move over the past month, since the September stall at the 140.00 handle, has been short cover after a violent move in July and August. Others have proclaimed that the carry trade is returning but given that expectation for tightening divergence between US and Japanese rates, that argument doesn’t make a lot of sense to me.
Nonetheless, next week will be telling as the pair has now re-engaged with the same zone that elicited large reversals in Q4 each of the past two years.
The US Dollar extended its bullish run for a third week, with resistance finally showing at the 200-day moving average.
The rally in the USD has been brisk and daily RSI has already pushed into overbought territory. The big question now is how bullish buyers will remain to be next week amidst next week’s Fed-speak, which up to this point, has leaned dovish even considering strong US data.
I look into each of these markets every Tuesday in the live webinar and you’re welcome to join the next installment: Click here for registration information.
When I looked at that as it took place in late-August, I shared the fact that rectification from those conditions could take time, as there was a heavy trend that was likely to see sellers try to continue the move; but also, a built-in bearish trend that would likely have bears looking to take profits, especially as the move started to stall.
That led to the build of a falling wedge formation which is often approached with aim of bullish reversal. And to be sure, bears had multiple opportunities to punch the trend-lower last month, but continually failed to do so. At the FOMC rate cut, the USD set a fresh low and then bounced. A couple weeks later, another fresh low saw similar strength come-in. And then on the first day of Q4 trade, bulls prodded the breakout, and, to this point, they haven’t really looked back much.
Some element of resistance finally came into play on Thursday of this week when DXY tested its 200-day moving average. That has so far held through Friday trade and at this point it seems like we’re looking at the first legitimate pullback in the pair since the breakout got started a few weeks ago.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD Strategy Across FX Majors
Just because USD is overbought and RSI is showing a push through the 70-level, it doesn’t mean the pullback has to deepen. This does remain a difficult area to chase the USD-higher, but traders should remain on-guard as so far this quarter the currency has put in a massive bullish move and that could show continuation through next week.
Of course, one of the larger factors at-play will be the Euro and rate cut expectations from the ECB, which helped to extend the trend over the past week. Perhaps the bigger question for the matter is weakness in the DXY’s largest constituent of the Euro, and Christine Lagarde has a couple of important speeches on the economic calendar for next week. But, for those looking at deeper pullback scenarios, there could be greener pastures elsewhere, such as GBP/USD or perhaps AUD/USD, which I’ll look at below.
For USD context, we’ve already seen a move down towards a prior resistance zone of 103.32-103.46. If that holds through early-trade next week, I’d take that as an impressive sign from bulls, which could point to more bearish potential in EUR/USD.
If the pullback does deepen below that zone, 103.00 comes up as the next area of interest, followed by another zone of confluent Fibonacci levels around the 102.55 level.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
It was the Euro that really stuck out to me in September as the Eurozone economy wasn’t exactly a bastion of strength compared to the US. But EUR/USD showed a strong trend in the first two months of Q3 as the pair rose by almost 500 pips; and it was the 1.1200 level where that move had started to stall.
Bulls defended 1.1000 ahead of the September ECB rate cut and price pushed right back to the 1.1200 level, but after two weeks of failing to break-through, sellers finally took-over around the Q4 open.
There’s only been one other instance of that so far this year, and it was right around the current 2024 low. But, again, this does not mean that the sell-off is finished and instead, it points to pullback potential which can bring lower-high resistance back into the equation.
For that – both 1.0900 and the 1.0943-1.0960 zone are attractive. If those get traded through, I’d expect a big test at 1.1000 and preferably, sellers could defend that level with a lower-high, inside of the prior week swing-high of 1.0997, to continue showing an element of control.
When USD-weakness was stalling in September as EUR/USD was stalling near resistance, GBP/USD was rushing up to fresh two-year highs. Resistance eventually showed at a Fibonacci level plotted at 1.3434 and as USD strength came online in Q4, GBP/USD bulls ducked for cover.
But there’s an interesting deviation here: When EUR/USD saw support above 1.1000 in September, leading to a re-test of 1.1200, GBP/USD had a similar support bounce above the 1.3000 handle. Bulls held the low two pips above and then drove into a fresh two-year high, even as EUR/USD was stalling.
That 1.3000 level was tested again this week and sellers weren’t able to make much fresh ground below, leading to a bounce. At this point, resistance has shown around prior support, so I can’t quite say that price action has turned bullish. But, there could be scope for that in early-trade next week.
From the four-hour chart we can see buyers attempting to take a larger role here and, shorter-term, a higher-high can be argued. The question now is whether a higher-low point of support can show up which can then begin to open the door for reversal strategies from shorter time frames.
Given the prior interplay with the 1.3000 level, that remains of interest for such. But there’s also the prior short-term swing high around 1.3025 that could serve a similar purpose.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley, GBP/USD on Tradingview
AUD/USD
On a similar note, when USD-weakness was in-play during Q3 AUD/USD had shown a strong bullish move, rising to a fresh yearly high before bulls backed away from a test of the .7000 big figure. With USD-strength coming back online, a strong pullback showed and this week AUD/USD put in a bounce from a big spot of support. The level of .6664 is the 50% mark of last year’s bullish move and it was the 23.6% retracement that helped to hold the highs late last month.
Like GBP/USD above, buyers have been attempting to grind the move-higher and at this point, a case can be argued for short-term higher-highs. If we do see a larger USD pullback, to perhaps the 102.55 zone or lower, the topside of AUD/USD could be of attraction. The next spot of resistance overhead is around the .6750 psychological level after which the 38.2% retracement of the above-mentioned Fibonacci setup comes back into the picture at .6681.
I’ve written a lot about USD/JPY over the past week, with the longer-term importance of the 150-151.95 zone very much in the conversation. Given the fact that the US is still widely-expected to cut rates, perhaps a bit later than previously expected, there would be a diminishing argument for the long side of the carry trade. I’m of the mind that much of what we’ve seen in the bullish move over the past month, since the September stall at the 140.00 handle, has been short cover after a violent move in July and August. Others have proclaimed that the carry trade is returning but given that expectation for tightening divergence between US and Japanese rates, that argument doesn’t make a lot of sense to me.
Nonetheless, next week will be telling as the pair has now re-engaged with the same zone that elicited large reversals in Q4 each of the past two years.
The US Dollar extended its bullish run for a third week, with resistance finally showing at the 200-day moving average.
The rally in the USD has been brisk and daily RSI has already pushed into overbought territory. The big question now is how bullish buyers will remain to be next week amidst next week’s Fed-speak, which up to this point, has leaned dovish even considering strong US data.
I look into each of these markets every Tuesday in the live webinar and you’re welcome to join the next installment: Click here for registration information.
When I looked at that as it took place in late-August, I shared the fact that rectification from those conditions could take time, as there was a heavy trend that was likely to see sellers try to continue the move; but also, a built-in bearish trend that would likely have bears looking to take profits, especially as the move started to stall.
That led to the build of a falling wedge formation which is often approached with aim of bullish reversal. And to be sure, bears had multiple opportunities to punch the trend-lower last month, but continually failed to do so. At the FOMC rate cut, the USD set a fresh low and then bounced. A couple weeks later, another fresh low saw similar strength come-in. And then on the first day of Q4 trade, bulls prodded the breakout, and, to this point, they haven’t really looked back much.
Some element of resistance finally came into play on Thursday of this week when DXY tested its 200-day moving average. That has so far held through Friday trade and at this point it seems like we’re looking at the first legitimate pullback in the pair since the breakout got started a few weeks ago.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD Strategy Across FX Majors
Just because USD is overbought and RSI is showing a push through the 70-level, it doesn’t mean the pullback has to deepen. This does remain a difficult area to chase the USD-higher, but traders should remain on-guard as so far this quarter the currency has put in a massive bullish move and that could show continuation through next week.
Of course, one of the larger factors at-play will be the Euro and rate cut expectations from the ECB, which helped to extend the trend over the past week. Perhaps the bigger question for the matter is weakness in the DXY’s largest constituent of the Euro, and Christine Lagarde has a couple of important speeches on the economic calendar for next week. But, for those looking at deeper pullback scenarios, there could be greener pastures elsewhere, such as GBP/USD or perhaps AUD/USD, which I’ll look at below.
For USD context, we’ve already seen a move down towards a prior resistance zone of 103.32-103.46. If that holds through early-trade next week, I’d take that as an impressive sign from bulls, which could point to more bearish potential in EUR/USD.
If the pullback does deepen below that zone, 103.00 comes up as the next area of interest, followed by another zone of confluent Fibonacci levels around the 102.55 level.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
It was the Euro that really stuck out to me in September as the Eurozone economy wasn’t exactly a bastion of strength compared to the US. But EUR/USD showed a strong trend in the first two months of Q3 as the pair rose by almost 500 pips; and it was the 1.1200 level where that move had started to stall.
Bulls defended 1.1000 ahead of the September ECB rate cut and price pushed right back to the 1.1200 level, but after two weeks of failing to break-through, sellers finally took-over around the Q4 open.
There’s only been one other instance of that so far this year, and it was right around the current 2024 low. But, again, this does not mean that the sell-off is finished and instead, it points to pullback potential which can bring lower-high resistance back into the equation.
For that – both 1.0900 and the 1.0943-1.0960 zone are attractive. If those get traded through, I’d expect a big test at 1.1000 and preferably, sellers could defend that level with a lower-high, inside of the prior week swing-high of 1.0997, to continue showing an element of control.
When USD-weakness was stalling in September as EUR/USD was stalling near resistance, GBP/USD was rushing up to fresh two-year highs. Resistance eventually showed at a Fibonacci level plotted at 1.3434 and as USD strength came online in Q4, GBP/USD bulls ducked for cover.
But there’s an interesting deviation here: When EUR/USD saw support above 1.1000 in September, leading to a re-test of 1.1200, GBP/USD had a similar support bounce above the 1.3000 handle. Bulls held the low two pips above and then drove into a fresh two-year high, even as EUR/USD was stalling.
That 1.3000 level was tested again this week and sellers weren’t able to make much fresh ground below, leading to a bounce. At this point, resistance has shown around prior support, so I can’t quite say that price action has turned bullish. But, there could be scope for that in early-trade next week.
From the four-hour chart we can see buyers attempting to take a larger role here and, shorter-term, a higher-high can be argued. The question now is whether a higher-low point of support can show up which can then begin to open the door for reversal strategies from shorter time frames.
Given the prior interplay with the 1.3000 level, that remains of interest for such. But there’s also the prior short-term swing high around 1.3025 that could serve a similar purpose.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley, GBP/USD on Tradingview
AUD/USD
On a similar note, when USD-weakness was in-play during Q3 AUD/USD had shown a strong bullish move, rising to a fresh yearly high before bulls backed away from a test of the .7000 big figure. With USD-strength coming back online, a strong pullback showed and this week AUD/USD put in a bounce from a big spot of support. The level of .6664 is the 50% mark of last year’s bullish move and it was the 23.6% retracement that helped to hold the highs late last month.
Like GBP/USD above, buyers have been attempting to grind the move-higher and at this point, a case can be argued for short-term higher-highs. If we do see a larger USD pullback, to perhaps the 102.55 zone or lower, the topside of AUD/USD could be of attraction. The next spot of resistance overhead is around the .6750 psychological level after which the 38.2% retracement of the above-mentioned Fibonacci setup comes back into the picture at .6681.
I’ve written a lot about USD/JPY over the past week, with the longer-term importance of the 150-151.95 zone very much in the conversation. Given the fact that the US is still widely-expected to cut rates, perhaps a bit later than previously expected, there would be a diminishing argument for the long side of the carry trade. I’m of the mind that much of what we’ve seen in the bullish move over the past month, since the September stall at the 140.00 handle, has been short cover after a violent move in July and August. Others have proclaimed that the carry trade is returning but given that expectation for tightening divergence between US and Japanese rates, that argument doesn’t make a lot of sense to me.
Nonetheless, next week will be telling as the pair has now re-engaged with the same zone that elicited large reversals in Q4 each of the past two years.
The US Dollar extended its bullish run for a third week, with resistance finally showing at the 200-day moving average.
The rally in the USD has been brisk and daily RSI has already pushed into overbought territory. The big question now is how bullish buyers will remain to be next week amidst next week’s Fed-speak, which up to this point, has leaned dovish even considering strong US data.
I look into each of these markets every Tuesday in the live webinar and you’re welcome to join the next installment: Click here for registration information.
When I looked at that as it took place in late-August, I shared the fact that rectification from those conditions could take time, as there was a heavy trend that was likely to see sellers try to continue the move; but also, a built-in bearish trend that would likely have bears looking to take profits, especially as the move started to stall.
That led to the build of a falling wedge formation which is often approached with aim of bullish reversal. And to be sure, bears had multiple opportunities to punch the trend-lower last month, but continually failed to do so. At the FOMC rate cut, the USD set a fresh low and then bounced. A couple weeks later, another fresh low saw similar strength come-in. And then on the first day of Q4 trade, bulls prodded the breakout, and, to this point, they haven’t really looked back much.
Some element of resistance finally came into play on Thursday of this week when DXY tested its 200-day moving average. That has so far held through Friday trade and at this point it seems like we’re looking at the first legitimate pullback in the pair since the breakout got started a few weeks ago.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD Strategy Across FX Majors
Just because USD is overbought and RSI is showing a push through the 70-level, it doesn’t mean the pullback has to deepen. This does remain a difficult area to chase the USD-higher, but traders should remain on-guard as so far this quarter the currency has put in a massive bullish move and that could show continuation through next week.
Of course, one of the larger factors at-play will be the Euro and rate cut expectations from the ECB, which helped to extend the trend over the past week. Perhaps the bigger question for the matter is weakness in the DXY’s largest constituent of the Euro, and Christine Lagarde has a couple of important speeches on the economic calendar for next week. But, for those looking at deeper pullback scenarios, there could be greener pastures elsewhere, such as GBP/USD or perhaps AUD/USD, which I’ll look at below.
For USD context, we’ve already seen a move down towards a prior resistance zone of 103.32-103.46. If that holds through early-trade next week, I’d take that as an impressive sign from bulls, which could point to more bearish potential in EUR/USD.
If the pullback does deepen below that zone, 103.00 comes up as the next area of interest, followed by another zone of confluent Fibonacci levels around the 102.55 level.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
It was the Euro that really stuck out to me in September as the Eurozone economy wasn’t exactly a bastion of strength compared to the US. But EUR/USD showed a strong trend in the first two months of Q3 as the pair rose by almost 500 pips; and it was the 1.1200 level where that move had started to stall.
Bulls defended 1.1000 ahead of the September ECB rate cut and price pushed right back to the 1.1200 level, but after two weeks of failing to break-through, sellers finally took-over around the Q4 open.
There’s only been one other instance of that so far this year, and it was right around the current 2024 low. But, again, this does not mean that the sell-off is finished and instead, it points to pullback potential which can bring lower-high resistance back into the equation.
For that – both 1.0900 and the 1.0943-1.0960 zone are attractive. If those get traded through, I’d expect a big test at 1.1000 and preferably, sellers could defend that level with a lower-high, inside of the prior week swing-high of 1.0997, to continue showing an element of control.
When USD-weakness was stalling in September as EUR/USD was stalling near resistance, GBP/USD was rushing up to fresh two-year highs. Resistance eventually showed at a Fibonacci level plotted at 1.3434 and as USD strength came online in Q4, GBP/USD bulls ducked for cover.
But there’s an interesting deviation here: When EUR/USD saw support above 1.1000 in September, leading to a re-test of 1.1200, GBP/USD had a similar support bounce above the 1.3000 handle. Bulls held the low two pips above and then drove into a fresh two-year high, even as EUR/USD was stalling.
That 1.3000 level was tested again this week and sellers weren’t able to make much fresh ground below, leading to a bounce. At this point, resistance has shown around prior support, so I can’t quite say that price action has turned bullish. But, there could be scope for that in early-trade next week.
From the four-hour chart we can see buyers attempting to take a larger role here and, shorter-term, a higher-high can be argued. The question now is whether a higher-low point of support can show up which can then begin to open the door for reversal strategies from shorter time frames.
Given the prior interplay with the 1.3000 level, that remains of interest for such. But there’s also the prior short-term swing high around 1.3025 that could serve a similar purpose.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley, GBP/USD on Tradingview
AUD/USD
On a similar note, when USD-weakness was in-play during Q3 AUD/USD had shown a strong bullish move, rising to a fresh yearly high before bulls backed away from a test of the .7000 big figure. With USD-strength coming back online, a strong pullback showed and this week AUD/USD put in a bounce from a big spot of support. The level of .6664 is the 50% mark of last year’s bullish move and it was the 23.6% retracement that helped to hold the highs late last month.
Like GBP/USD above, buyers have been attempting to grind the move-higher and at this point, a case can be argued for short-term higher-highs. If we do see a larger USD pullback, to perhaps the 102.55 zone or lower, the topside of AUD/USD could be of attraction. The next spot of resistance overhead is around the .6750 psychological level after which the 38.2% retracement of the above-mentioned Fibonacci setup comes back into the picture at .6681.
I’ve written a lot about USD/JPY over the past week, with the longer-term importance of the 150-151.95 zone very much in the conversation. Given the fact that the US is still widely-expected to cut rates, perhaps a bit later than previously expected, there would be a diminishing argument for the long side of the carry trade. I’m of the mind that much of what we’ve seen in the bullish move over the past month, since the September stall at the 140.00 handle, has been short cover after a violent move in July and August. Others have proclaimed that the carry trade is returning but given that expectation for tightening divergence between US and Japanese rates, that argument doesn’t make a lot of sense to me.
Nonetheless, next week will be telling as the pair has now re-engaged with the same zone that elicited large reversals in Q4 each of the past two years.
The US Dollar extended its bullish run for a third week, with resistance finally showing at the 200-day moving average.
The rally in the USD has been brisk and daily RSI has already pushed into overbought territory. The big question now is how bullish buyers will remain to be next week amidst next week’s Fed-speak, which up to this point, has leaned dovish even considering strong US data.
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When I looked at that as it took place in late-August, I shared the fact that rectification from those conditions could take time, as there was a heavy trend that was likely to see sellers try to continue the move; but also, a built-in bearish trend that would likely have bears looking to take profits, especially as the move started to stall.
That led to the build of a falling wedge formation which is often approached with aim of bullish reversal. And to be sure, bears had multiple opportunities to punch the trend-lower last month, but continually failed to do so. At the FOMC rate cut, the USD set a fresh low and then bounced. A couple weeks later, another fresh low saw similar strength come-in. And then on the first day of Q4 trade, bulls prodded the breakout, and, to this point, they haven’t really looked back much.
Some element of resistance finally came into play on Thursday of this week when DXY tested its 200-day moving average. That has so far held through Friday trade and at this point it seems like we’re looking at the first legitimate pullback in the pair since the breakout got started a few weeks ago.
US Dollar Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
USD Strategy Across FX Majors
Just because USD is overbought and RSI is showing a push through the 70-level, it doesn’t mean the pullback has to deepen. This does remain a difficult area to chase the USD-higher, but traders should remain on-guard as so far this quarter the currency has put in a massive bullish move and that could show continuation through next week.
Of course, one of the larger factors at-play will be the Euro and rate cut expectations from the ECB, which helped to extend the trend over the past week. Perhaps the bigger question for the matter is weakness in the DXY’s largest constituent of the Euro, and Christine Lagarde has a couple of important speeches on the economic calendar for next week. But, for those looking at deeper pullback scenarios, there could be greener pastures elsewhere, such as GBP/USD or perhaps AUD/USD, which I’ll look at below.
For USD context, we’ve already seen a move down towards a prior resistance zone of 103.32-103.46. If that holds through early-trade next week, I’d take that as an impressive sign from bulls, which could point to more bearish potential in EUR/USD.
If the pullback does deepen below that zone, 103.00 comes up as the next area of interest, followed by another zone of confluent Fibonacci levels around the 102.55 level.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; data derived from Tradingview
EUR/USD
It was the Euro that really stuck out to me in September as the Eurozone economy wasn’t exactly a bastion of strength compared to the US. But EUR/USD showed a strong trend in the first two months of Q3 as the pair rose by almost 500 pips; and it was the 1.1200 level where that move had started to stall.
Bulls defended 1.1000 ahead of the September ECB rate cut and price pushed right back to the 1.1200 level, but after two weeks of failing to break-through, sellers finally took-over around the Q4 open.
There’s only been one other instance of that so far this year, and it was right around the current 2024 low. But, again, this does not mean that the sell-off is finished and instead, it points to pullback potential which can bring lower-high resistance back into the equation.
For that – both 1.0900 and the 1.0943-1.0960 zone are attractive. If those get traded through, I’d expect a big test at 1.1000 and preferably, sellers could defend that level with a lower-high, inside of the prior week swing-high of 1.0997, to continue showing an element of control.
When USD-weakness was stalling in September as EUR/USD was stalling near resistance, GBP/USD was rushing up to fresh two-year highs. Resistance eventually showed at a Fibonacci level plotted at 1.3434 and as USD strength came online in Q4, GBP/USD bulls ducked for cover.
But there’s an interesting deviation here: When EUR/USD saw support above 1.1000 in September, leading to a re-test of 1.1200, GBP/USD had a similar support bounce above the 1.3000 handle. Bulls held the low two pips above and then drove into a fresh two-year high, even as EUR/USD was stalling.
That 1.3000 level was tested again this week and sellers weren’t able to make much fresh ground below, leading to a bounce. At this point, resistance has shown around prior support, so I can’t quite say that price action has turned bullish. But, there could be scope for that in early-trade next week.
From the four-hour chart we can see buyers attempting to take a larger role here and, shorter-term, a higher-high can be argued. The question now is whether a higher-low point of support can show up which can then begin to open the door for reversal strategies from shorter time frames.
Given the prior interplay with the 1.3000 level, that remains of interest for such. But there’s also the prior short-term swing high around 1.3025 that could serve a similar purpose.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley, GBP/USD on Tradingview
AUD/USD
On a similar note, when USD-weakness was in-play during Q3 AUD/USD had shown a strong bullish move, rising to a fresh yearly high before bulls backed away from a test of the .7000 big figure. With USD-strength coming back online, a strong pullback showed and this week AUD/USD put in a bounce from a big spot of support. The level of .6664 is the 50% mark of last year’s bullish move and it was the 23.6% retracement that helped to hold the highs late last month.
Like GBP/USD above, buyers have been attempting to grind the move-higher and at this point, a case can be argued for short-term higher-highs. If we do see a larger USD pullback, to perhaps the 102.55 zone or lower, the topside of AUD/USD could be of attraction. The next spot of resistance overhead is around the .6750 psychological level after which the 38.2% retracement of the above-mentioned Fibonacci setup comes back into the picture at .6681.
I’ve written a lot about USD/JPY over the past week, with the longer-term importance of the 150-151.95 zone very much in the conversation. Given the fact that the US is still widely-expected to cut rates, perhaps a bit later than previously expected, there would be a diminishing argument for the long side of the carry trade. I’m of the mind that much of what we’ve seen in the bullish move over the past month, since the September stall at the 140.00 handle, has been short cover after a violent move in July and August. Others have proclaimed that the carry trade is returning but given that expectation for tightening divergence between US and Japanese rates, that argument doesn’t make a lot of sense to me.
Nonetheless, next week will be telling as the pair has now re-engaged with the same zone that elicited large reversals in Q4 each of the past two years.
Chart prepared by James Stanley; data derived from Tradingview
Chart prepared by James Stanley; data derived from Tradingview
Chart prepared by James Stanley, EUR/USD on Tradingview
Chart prepared by James Stanley, GBP/USD on Tradingview
Chart prepared by James Stanley, GBP/USD on Tradingview
Chart prepared by James Stanley, AUD/USD on Tradingview
Chart prepared by James Stanley, USD/JPY on Tradingview
Chart prepared by James Stanley; data derived from Tradingview
