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

The US Dollar has been bouncing through the US session so far today, but it’s tomorrow that has most traders’ attention as we’ll see the most recent PCE read before Jerome Powell’s speech at Jackson Hole. That one-two combo can serve to keep the USD on the move but, expectations have diminished over the past couple of weeks for what Powell may actually say here.

At the July FOMC rate decision, Powell sounded as dovish as ever, shrugging off 5% inflation reads and, instead, highlighting how the labor market remains far away from the ‘significant further progress’ that the bank wants to see before making policy less loose.

But a couple of days later, FOMC Vice Chair Richard Clarida sounded a bit more hawkish, saying that he could foresee an earlier start to tapering asset purchases and this was echoed in the FOMC meeting minutes that were released that were released last week, with most participants seeing a 2021 start to the tapering process.

This helped USD to firm up to a fresh 2021 high before prices started to turn around last Friday, and that pullback continued through the early portion of this week, with USD now resting at a key spot of support around the 92.80-92.90 zone on DXY.

US DOLLAR TWO-HOUR PRICE CHART

USD US Dollar Two Hour Price Chart

Chart prepared by James StanleyUSD, DXY on Tradingview

EUR/USD BREAKDOWN FALLS FLAT

As the USD was surging last week, EUR/USD was finally able to break through a big spot of support around the 1.1700 handle. The problem is what happened after, as prices moved down to 1.1665 and then stalled, even as the USD continued to track-higher. A day later, on Friday, sellers were stymied again and prices soon broke back-above support. The 1.1750 offered another element of resistance and while that held the highs on Tuesday, it was eventually traded through on Wednesday and, at this point, we’re seeing a bit of support show around that prior area of resistance.

This can keep the door open for a move up towards the prior batch of resistance, taken from around the 1.1800 handle that held the highs two weeks ago.

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