US Dollar Price Outlook in EUR/USD, GBP/USD and USD/CAD

EURUSD, GBPUSD, USDCAD TALKING POINTS:

• The US Dollar is pulling back after another strong week, with near-term support showing up around the 98.00 level on DXY.
• EURUSD has put in a higher-low after failing to re-test the 1.1106 level; but USD-strength has remained very clearly in pairs like GBP/USD and USD/CAD, each of which have hit multi-month highs or lows as the June open nears.
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US DOLLAR PULLS BACK AFTER ANOTHER STRONG WEEK

It’s been another strong week in the US Dollar as the currency has made another push towards the two-year-high at 98.32. The USD has gained each day Monday-Thursday. Buyers slowed down ahead of a re-test at 98.32 and since yesterday morning, prices have started to pullback. That’s has produced another failure to breakdown in EUR/USD as sellers shied away from a re-test of two-year lows; but elsewhere, such as GBP/USD or USD/CAD, USD bulls continue to push. Next week’s economic calendar has considerable potential for a continued drive of volatility with high-impact releases due each day of the week, including Central Bank rate decisions out of Australia on Monday night/Tuesday morning and Europe on Thursday.

US DOLLAR PULLS BACK TO SUPPORT AFTER BULLS SHY AWAY FROM THE HIGHS

A strong week and finish to the month of May in the US Dollar is seeing a bit of retracement ahead of the June open. While the Federal Reserve remains non-committal to future policy measures, the USD has continued with a ‘cleanest shirt in the dirty laundry’ theme. The currency came into Q2 with an ascending triangle pattern, which will often be approached in a bullish fashion. The level of 97.70 had held three topside advances in the prior six months, and that level finally started to give way in April. But, once price action had ascended into that area, buying pressure slowed and DXY topped-out at 98.32. May price action saw another attempt to rally up to fresh highs. But buyers were re-buffed around that same price of 98.32.

The big question as the June open approaches is whether USD Bulls will be able to leave this area on the chart behind? At this point, prices have pulled back to find support in a confluent area that was looked at last week, spanning from 97.94-97.96.

US DOLLAR FOUR-HOUR PRICE CHART

EURUSD BEARS SHY AWAY FROM SUPPORT TEST: IS ECB THE CATALYST THAT THEY NEED?

Last weekend’s European Parliamentary elections kept the potential for gap-risk in the single currency to open this week. But, after a relatively calm open, prices in EURUSD scaled-lower and made a fast approach at the two-year low around 1.1106. Similar to the mirror image of the US Dollar, however, sellers shied away from another test of the low and prices have worked back into the prior range.

Next week brings the European Central Bank for their June rate decision on Thursday. Will the ECB be able to evoke a bearish break, brought upon by a gloomy forward-looking outlook? This can keep break-down potential alive in the pair over the next week; and if prices do continue to re-trace, sellers can look to a series of levels that exhibited prior inflections in the effort of seeking out near-term resistance.

EURUSD FOUR-HOUR PRICE CHART

GBPUSD – CABLE CRUSHED TO FRESH FIVE MONTH LOWS

One area where USD-bulls have not been bashful on the final trading day of May is against the British Pound. GBPUSD is pushing down to a fresh five month low ahead of the weekend, and prices in the pair are approaching some key areas of potential support around the 1.2500-handle. This caps a brutal month in the pair in which sellers remained in-control for much of the period, driven by concerns around Brexit.

The big question here is whether sellers will be able to elicit a challenge of the 1.2500 level as the final month of Q2 nears.

GBPUSD WEEKLY PRICE CHART

USDCAD BREAKOUT RALLIES TO FRESH FIVE MONTH HIGHS

The big item on this week’s macro calendar was the Bank of Canada rate decision on Wednesday. And while the pair avoided making any definite proclamations, the dovish tone from that rate decision helped to bring in CAD-weakness and the USDCAD pair made a topside push above the 1.3521 level that had previously functioned as the four-month-high. Near-term resistance has shown from an interesting level, taken from a batch of higher-lows that had set-in shortly after the January open. This was looked at on Tuesday as target potential for topside breakouts in USDCAD; and with this being a very clear area for buyers to have started taking profits, the door can remain open to themes of bullish continuation - particularly should near-term price action remain above the 1.3480 level that had previously helped to demarcate resistance within the month-long range formation.

USDCAD FOUR-HOUR PRICE CHART

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