US Dollar Price Action Setups: EUR/USD, GBP/USD And USD/CAD

The US Dollar is putting in a bounce from yesterday’s lows, following a week-long pullback as the FOMC gears up for their July rate decision.

With this being a non-quarterly meeting, there’s scant expectation for anything new. As outlined by our own Rich Dvorak, given the rise in covid variant numbers and the risk of continued expansion there, this seems like a meeting where Chair Powell may continue to bias towards caution when discussing policy parameters.

Perhaps with that expectation being priced in, the US Dollar has spent much of the past week pulling back from fresh three-month-highs. Those highs printed just above a zone of previously unfilled gap from early-Q2, with the 93.00 psychological level also coming into play on DXY.

The pullback thus far has found support around the 23.6% Fibonacci retracement of the 2020 sell-off, plotted at around 92.46. A hold of higher-low support through this afternoon’s FOMC rate decision keeps the door open for bullish strategies in the USD.

US DOLLAR DAILY PRICE CHART

US Dollar Daily Price Chart

Chart prepared by James StanleyUSD, DXY on Tradingview

EUR/USD

On the long side of the US Dollar, EUR/USD remains compelling. The pair came very close to testing a big spot of support last week, harbored around three-month-lows. After a minor pullback, sellers appear to be showing resistance inside of the 1.1856 Fibonacci level, and this can keep the door open for a re-test of the big spot of support, running from Fibonacci levels around 1.1709-1.1736.

EUR/USD DAILY PRICE CHART

EURUSD Daily Price Chart

Chart prepared by James StanleyEURUSD on Tradingview

GBP/USD AT A BIG SPOT

There’s a case on both sides of the USD if looking at GBP/USD. The past week of USD-weakness has reflected very well on the long side of GBP/USD, in stark contrast to the EUR/USD scenario looked at above. This highlights how GBP/USD may be a more amenable venue should USD-weakness result from this afternoon’s FOMC rate decision.

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