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

[MongiIG]

US DOLLAR TALKING POINTS:

• The US Dollar has traded up to a fresh 19-year high with another bullish burst overnight.
• EUR/USD and GBP/USD are in meltdown mode and USD/JPY got back into the mix overnight with another strong push in that bullish trend.
• The US Dollar is currently showing its largest monthly gain since October of 2008.
• This morning’s data was not positive as Q1 GDP came in at -1.4% versus an expectation of +1.1%. That gave a quick pullback to the USD that was quickly bought shortly after.
• The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

The US Dollar has been unstoppable of late and today marks the currency hitting a fresh 19-year-high.

As looked at in the Q2 forecast, the US Dollar was already really strong coming into the quarter. There was a tease of this move in Q1 of 2021 as markets started to brace for higher rates, but that theme quieted in Q2 before coming back to life in Q3. And since coming back to life – it’s only continued to scale higher as stronger and stronger inflation is forcing the Fed further and further away from the easy money policies that have led us into this spot.

And despite that strength coming into Q2 the USD has only grown stronger, and April so far is showing the largest monthly gain in the Greenback since October of 2008.

US DOLLAR WEEKLY PRICE CHART

Chart prepared by James Stanley; USD, DXY on Tradingview

US DOLLAR SHORTER-TERM

The move in the USD over the past week has been especially sharp and consistent with only a minimum of a pullback. Given the context, with prices just hitting a fresh 19 year high as a negative GDP report was released, and there could be a logical scope for pullbacks. But – given how bullish the backdrop is any pullbacks might be limited as there’s remained a number of buyers on the sidelines waiting to get long, illustrated by the fact that price action has only continued to broaden during this bullish jump.

There was prior resistance potential around 103.50 and 103 that can remain of interest for support/pullback potential.

US DOLLAR HOURLY PRICE CHART

Chart prepared by James Stanley; USD, DXY on Tradingview

EUR/USD

EUR/USD has been in full meltdown mode and this month is currently showing as the largest sell-off in the pair since January of 2015. And that prior instance is of interest as that was a major macro event – that was the month that the Swiss National Bank removed the peg from EUR/CHF, which allowed the Euro to go into free-fall for a bit.

The big item here was crossing the 1.0500 psychological level overnight. This marks fresh five year lows in the pair.

EUR/USD WEEKLY PRICE CHART

Chart prepared by James Stanley; EURUSD on Tradingview

GBP/USD

Cable has similarly been in a hard sell mode over the past week. It was just last Thursday that the descending triangle was giving way to a bearish breakdown at the 1.3000 handle. Yesterday saw the pair push down to the 1.2500 level and overnight, even that was broken through.

In GBP/USD, April is currently showing as the worst month in the pair since Brexit. And, unlike EUR/USD above, there’s no nearby support that’s coming into soften this morning’s sell-off.

GBP/USD DAILY PRICE CHART

Chart prepared by James Stanley; GBPUSD on Tradingview

USD/JPY THROTTLES HIGHER

When I looked into USD earlier this week, USD/JPY looked like it might have some pullback potential. That has since turned out to be incorrect as the Yen got another major shot overnight, and this move in the Yen was even weaker than that of the Euro or British Pound as indicated by the gains in EUR/JPY and GBP/JPY that are showing as of now.

Previously the 130.00 level was looked at as important. This morning, that seems to be less so as price has forced a push above the 130 level and even touched 131.

Yesterday’s bullish engulfing candlestick in USD/JPY has extended up to another fresh 20-year-high.

USD/JPY DAILY PRICE CHART

Chart prepared by James Stanley; USDJPY on Tradingview

AUD/USD DROPPING TO THE BIG FIG

On the front of reversals, the move in AUD/USD this month has been noteworthy. The pair was previously strong coming into April trade, setting a fresh nine-month-high in the opening days of the month. But following a strong reversal on April 5th, sellers have been in-charge and prices are making a fast run at the .7000 psychological level.

From the not-yet-completed monthly chart below, we can see AUD/USD working on a bearish engulfing candlestick that points to a potential break of the .7000 big fig.

AUD/USD MONTHLY PRICE CHART

Chart prepared by James Stanley; AUDUSD on Tradingview

--- Written by James Stanley, Senior Strategist for DailyFX.com. 28th April 2022