US Dollar Price Action Setups: EUR/USD, USD/JPY Breakdowns

US Dollar Talking Points:

  • The US Dollar has jumped up to another fresh 19-year high overnight, fueled by a breakdown in EUR/USD below the 1.0500 handle.
  • EUR/USD had held support at 1.0500 for 10 days and finally gave way on the 11th. The momentum on the breakdown was likely helped along by triggered stops and the question now is whether sellers continue to hit the move. The five-year-low is a little lower on the chart, and that 1.0500 spot of prior support becomes resistance potential.
  • USD/JPY began to pullback, testing through a trendline that had held the lows through April trade.
  • 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.

On the 11th day, it broke…

EUR/USD had held support at the 1.0500 handle for 10 days and yesterday, I highlighted pullback potential in EUR/USD, USD/JPY and the US Dollar. That did not happen for either EUR/USD or USD and it looks like a breach of the 1.0500 level triggered stops that added fuel to the fire as the pair tumbled down to fresh five year lows this morning.

The next spot of support is the 1.0340 level which was the low in January of 2017.

EUR/USD Daily Price Chart

Chart prepared by James Stanley; EURUSD on Tradingview

EUR/USD

The short side of the euro could be a difficult pair to chase. But, on the other side, there’s no sign yet that bears are done so reversals can be similarly complicated.

On a short-term basis, there’s resistance potential around prior short-term swings. The level at 1.0441 is very nearby and this would be an aggressive spot to plot for. If sellers remain aggressive that’d be a point of interest. A bit deeper, there’s a little more context around 1.0469 which was a late-April price swing. And, above that, the 1.0500 level looms large as this was support for more than two weeks before finally giving way.

EUR/USD Two-Hour Price Chart

eurusd two hour price chart

Chart prepared by James Stanley; EURUSD on Tradingview

USD/JPY

USD/JPY on the other hand did put in a greater turn. As looked at yesterday, a trendline had started to get breached and that was opening the door to a deeper bearish move. Yen-strength played through overnight and the pair is now setting at a fresh low.

The excitement here is one of continuation potential as those trends in Yen-weakness ran for some time and the current pullback is but a small portion of that prior move. Caution should still be exercised, however, and there’s now resistance potential at prior support, taken from around 128.71 and, if that can’t hold, around 129.42.

USD/JPY Four-Hour Price Chart

usdjpy four hour price chart

Chart prepared by James Stanley; USDJPY on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX