US Dollar Price Outlook: USD Bounce Runs into Resistance

US Dollar Price Outlook Talking Points:

• The early-June sell-off in the US Dollar has finally found some support after the NFP release last week and prices have continued to push-higher since.

• USD price action is now testing a confluent area of short-term resistance, and next weeks FOMC rate decision looms large. Will buyers be able to push through this key zone？

• DailyFX Forecasts are published on a variety of currencies such as Gold, the US Dollar or the Euro and are available from the DailyFX Trading Guides page. If youre looking to improve your trading approach, check out Traits of Successful Traders. And if youre looking for an introductory primer to the Forex market, check out our New to FX Guide.

US Dollar Bounce from Confluent Support Runs into Short-Term Resistance

The US Dollar continues to move-higher in an almost begrudging fashion. Last week saw a big area of support come into play when the Dollar collapse ran into a Fibonacci level at 96.47. Also of note was the 200-day moving average in the same area, marking this as a confluent spot on the chart. But, after a quick gap-up to start this weeks trade, buyers have continued to push, bringing prices up to another area on the chart that carries a bit of confluence, albeit of a shorter-term variety, and this runs around the 97.00 level on DXY. This is the May swing-low as well as the 50% retracement of the March-April bullish run in the Greenback; and also the 38.2% retracement of the 2019 major move.

US Dollar Daily Price Chart

Chart prepared by James Stanley

With retail sales on the calendar for tomorrow and the FOMC rate decision on the docket for next week, the big focus appears to be on whether the Dollar can push through the confluent support that came into play last week. If the US Dollar is able to further breakdown, this brings attention to topside setups in pairs like EURUSD or perhaps even GBPUSD as shorts get further squeezed as a new theme gets priced-in around USD. On the other hand, should recovery continue, bullish potential remains in pairs like USDCAD, or bearish potential in a pair like AUDUSD which has hurriedly pushed back down to the lows as this weeks USD bounce has extended.

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AUDUSD Push Down to .6900 as USD Holds Support

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Coming into this week, I had looked at the short-side of AUDUSD, largely looking to capitalize on a support bounce in the Greenback but supported by the resistance inflection that had already shown in AUDUSD. The pair has now pushed down through the first target and is finding a bit of support; but this does highlight the potential for another run at the lows after last week‘s bounce and ’rate hike rally in the Aussie gets further priced-out.

At this point, traders can look for resistance in the prior support zone that runs from .6940-.6960.

AUDUSD Four-Hour Price Chart

Chart prepared by James Stanley

USDCAD Recovers After Test of Three-Month-Lows

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Similarly, I looked at topside potential in USDCAD should the pair hold support around the 1.3250 psychological level. And after a quick run on that support after this weeks open, buyers held the bid and prices started to bounce. At this stage, a shorter-term pullback has developed in that bounce, with a bit of short-term support offered around the 1.3300 handle. This can keep the door open for short-term topside trend potential into the zone of prior support that runs from 1.3361-1.3385.

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USDCAD Two-Hour Price Chart

Chart prepared by James Stanley

EURUSD Posturing Above Support Potential

Given the aggressiveness of last week‘s USD-weakness, trading for continuation wasn’t expected to be simple. In EURUSD, I had looked at this in this week‘s FX Setups, attempting to avoid chasing the move-higher while re-incorporating a prior zone of resistance as potential higher-low support. This zone runs from 1.1248-1.1265 and, hasn’t yet been tested this week. There has been some development of support around the 1.1290-area but that doesn‘t look attractive enough to stage bullish approaches off of; particularly considering the fact that stops would be more than 100 pips if looking to get risk levels below last week’s NFP swing-low in EURUSD.

EURUSD Eight-Hour Price Chart

Chart prepared by James Stanley

GBPUSD Ranges in Key Zone

A similar albeit less-developed theme has shown in GBPUSD. The month of May was absolutely brutal for the British Pound, and bears remained in control for much of the period. But, late in the month a big zone of support came into play that‘s rarely been tested, and prices have held the line ever since. The big difference here from the Euro is the fact that the bounce has been far more subdued, thereby making the pair a bit less attractive for USD-weakness themes. But, nonetheless, buyers are holding support despite the fact that they’ve been unable to break-up to a fresh higher-high. If this does take place, however, the door can soon open to topside setups looking for a deeper retracement of May losses. A break-above 1.2763 in GBPUSD can begin to open the door for such scenarios.

GBPUSD Four-Hour Price Chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar？ Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you‘re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what were looking at.

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If youre looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

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--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX