Talking points about the US dollar:
- The US dollar rebounds to start June trading, after a two-week decline at the end of May.
- Price action in May produced the first bearish monthly bar for the 2022 trading. But, support has already appeared at a key point, aided by the Fibonacci retracement at 101.80. Are USD bulls knocking on the door with Friday’s Nonfarm Payrolls and the FOMC in two weeks?
- The analysis in the article is based on price movement And the chart formations. To learn more about price action or chart patterns, check out DailyFX Education Section.
The US dollar just completed its first bearish monthly bar in the trading of 2022. The first part of the month saw the bulls rise to another new high, this time setting a 19-year high for the currency. But that strength dissipated in the second half of the month as stocks started showing signs of easing.
The second half of May saw all of the first month’s gains erased, with prices returning to a key area on the chart, plotted around some previous resistance around 61.8% Fibonacci retracement From the main step 2001-2008.
US dollar monthly rate chart
The graph was prepared by James Stanley; US dollar, DXY on Tradingview
US dollar in the short term
In the short term, support plays from a previous resistance point. This intrigues about a trend line A projection from the uptrend channel that guided the coin for the better part of the year until the mid-April breakout. This support came into effect on Monday and led to yesterday’s bounce that has continued so far today.
We are now at near term resistance, we draw it at 102.35 taken from the previous swing low. Short-term support potential remains at 102.04 and 101.80.
US dollar daily price chart
The graph was prepared by James Stanley; USD, DXY on TradingView
EUR / USD
The move along with this pullback to the upside of the US dollar was a similar pullback to the downside movement of the EUR/USD. Prices put in very strong outlays for two weeks after coming close to hitting a new 19-year low for the pair. This price is at 1.0340 and last month’s low for the EUR/USD has printed just 8 pips, highlighting the oversold condition that sellers have lost interest in.
This led to a short pressure that continued to heat up through the rest of the month, with May resistance finally emerging around an earlier support point, around the same 1.0765 level that was running as support in April.
At this point prices have already slipped below the key level around 1.0695 but there is a major spot of support extending from 1.0593 to 1.0638 and the presence of support here could keep the door open for bullish themes, especially given the longer term oversold background that has already contributed In rebound for two weeks. But – if the sellers are able to test the 1.0593 Fibonacci level, the door opens for a test of 1.0500 psychological levelAnd, if sellers can test through that – the drop unfolds.
EUR/USD Weekly Price Chart
The graph was prepared by James Stanley; EURUSD on Tradingview
British Pounds / US Dollars
While the EUR/USD is hovering above this significant support point, the GBP/USD has already started testing its similarly spotted area. I am tracking the support in the pair from the Fibonacci level sticking to the 61.8% indicator of the main movement 2020-2021 around 1.2500. That extended to 1.2452, taken from a bunch of previous volatility, and holding here keeps the door open for an upside potential.
But, like the EUR/USD pair above, the strength of the past two weeks may have been a pullback from deep oversold conditions and there is still room for bearish behaviour. A breach of the 1.2380 level of the previous resistance will make the bearish look more attractive, and this opens the door for a retest of the 1.2250 level, after which the effect of the swing low from 1.2153 will begin.
Daily price chart for GBP/USD
The graph was prepared by James Stanley; British Pounds / US Dollars on Tradingview
Australian dollar / US dollar
For those looking for a deeper pullback in the US dollar, the AUD/USD may turn out to be more attractive again, especially considering the price action in the first two days of this week. While the EUR/USD and GBP/USD actually seem to be in reversal patterns, the AUD/USD is still, at this point, showing a blue weekly bar. The next major resistance point is around the psychological level of .7250, and there is still potential for support near the big number 0.7000 all the way to the .7053 Fibonacci level. There is also a spot of potential short-term support plotted at a previous swing high around .7113. For the bulls looking for a near-term continuation, holding support will be key to keep the door open for a retest of 7250.
AUD/USD daily price chart
The graph was prepared by James Stanley; AUDUSD on Tradingview
US dollar / Japanese yen
The USD/JPY pair appears to be heading towards issues of US dollar strength as well, with prices quickly climbing to the 130.00 psychological level. There is also the appearance of a cup forming to form a potential cup and handle, which should keep the door open for short term resistance from 130.00 for the handle to build, with an eye on potential support around prior resistance at 129.42. If that can’t hold, there is a deeper support potential around 128.71 and waiting there could maintain a bullish slope.
Four-Hour USD/JPY Price Chart
The graph was prepared by James Stanley; US dollar / Japanese yen on Tradingview
— written by James StanleyAnd the Senior strategist for DailyFX.com
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