US Dollar Suffers Setback, Bias Remains Bullish Against Most Majors

The US Dollar suffered a setback last week, losing ground against most major currencies as better-than-expected results from a handful of key earnings reports weighed on demand for the safety-linked currency. Still, positioning suggest that the overall bias remains bullish and we will retain our standing long exposure.

[B]EUR/USD[/B]

[B]Strategy: Short at 1.3936, Targeting 1.2922[/B]

[B]Weekly Profit / Loss: [/B][B]-124 pips[/B]

We sold EURUSD at 1.3936. Overall positioning is essentially unchanged from last week: prices continue to consolidate in a well-defined range below 1.4141, with the pair now positioned squarely at resistance and showing a Hammer candlestick, hinting at a downward reversal ahead. We will remain short, looking for prices to take out the range bottom at 1.3742 as EURUSD heads to the previous swing low below 1.30. As before, a stop-loss will be activated on a daily close above the 06/03/09 wick high at 1.4340.

For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.

[B]GBP/USD[/B]

[B]Strategy: Short at 1.6274, Targeting 1.4990[/B]

[B]Weekly Profit / Loss: [/B][B]-82 pips[/B]

We sold GBPUSD at 1.6274. Prices continue to oscillate in a wide range between 1.5960 and 1.6670, with overall positioning essentially unchanged since late May. Near-term support is seen at a rising trend line stretching from the lows in March, now at 1.6139. We will continue to hold short, looking for a break below this juncture to target 1.4990. A stop-loss will be activated on a daily close above the 06/03 wick high at 1.6667.

For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.

[B]USD/JPY[/B]

[B]Strategy: Pending Short[/B]

The Head and Shoulders bearish reversal setup that we identified last week looks to have been confirmed. Turning back to the daily chart to assess the near-term picture, we see that USDJPY has taken out support at 94.41 and this level is now acting as resistance following a bounce from the bottom of a channel that has guided the pair lower since early April. A Hammer has been put in, and we will look for a bearish close on the current candle to offer confirmation and trigger an entry short.

For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.

[B]USD/CAD[/B]

[B]Strategy: Pending Long[/B]

[B]Weekly Profit / Loss: [/B][B]-285 pips[/B]

Last week, we went long USDCAD at 1.1618. This proved premature: USDCAD reversed sharply lower to activate our stop-loss with a close below 1.1417, booking a hefty 285-pip loss. Still, the bullish bias looks to be intact. A new low has now been made and prices are showing an Inverted Hammer on a retest of resistance-turned-support at a falling trend line from the March swing high. We will look for confirmation on a bullish close for the current candle to re-enter long.

For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.

[B]AUD/USD[/B]

[B]Strategy: Short at 0.7896, Targeting 0.6949[/B]

[B]Weekly Profit / Loss: [/B][B]-199 pips[/B]

We sold AUDUSD at 0.7896. Prices retraced higher last week on a corrective bounce from the bottom of a falling channel but are now showing signs of reversal with a Hammer candlestick at the intersection of the channel’s upper boundary and support-turned-resistance at a rising trend line established from the swing low in March. We will remain short, continuing to look for a decline to the previous swing bottom at 0.6949. As before, a stop-loss will be activated on a daily close above the 06/03 wick high at 0.8269.

For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.

[B]NZD/USD[/B]

[B]Strategy: Short at 0.6305, Targeting 0.5522[/B]

[B]Weekly Profit / Loss:[/B][B] -141 pips[/B]

We sold NZDUSD at 0.6305. As with its Australian counterpart, the pair has rebounded since last week. Still, a series of lower highs marked by a near-term falling trend line suggest the directional bias continues to favor bears. A long-legged Doji candlestick is hinting that a reversal lower may be near and we will remain short, targeting April’s swing low at 0.5522. A stop-loss will be activated on a daily close above 0.6601, the 06/02 wick high.

For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.

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