Not all US Dollar pairs are created equal DXY USDJPY EURUSD

Not all US Dollar pairs are created equal: DXY, USD/JPY, EUR/USD

Earlier this morning, the US Dollar index shot higher after hitting lows not seen since April 2018 from near 90.40 up to 90.85.  Since then, DXY has pulled back 50% of that range. On a 15-minute timeframe, if the US Dollar index holds the 90.63 level, traders will look to drive the pair back up to 90.85 and possibly even fill the gap near 90.95.  If the 50% level breaks, watch for support at the 61.8% Fibonacci retracement level of the move near 90.58, then a complete retracement of the move back to 90.42.

Source: Tradingview, City Index

However, not all USD pairs followed suit.   Even with the S&P 500 falling roughly 30 handles,  USD/JPY did not pull back with the DXY after it rallied from near 103.50 to 104.10.  The pair only pulled back 10 pips!  On a 15-minute timeframe, it appears to have formed a flag formation and wants to break higher. The target for the breakout of a flag formation is the length of the flagpole added to the breakout point.  If price were to breakout above 104.10, the target is near 104.55.  There is horizontal resistance near there at 104.58.  If USD/JPY does pullback, look for support at the 38.2% Fibonacci retracement level near 103.87 and the 50% retracement level and horizontal support near 103.80.

Source: Tradingview, City Index

On the other hand, on the 15-minute timeframe, EUR/USD retraced almost 90% of its selloff on the USD bounce.  The pair bounced from 1.2123 back to up 1.2161.  If the pair can hold 1.2141 (50% of the bounce back), watch for it to continue higher towards Mondays highs at 1.2177.  If it breaks below, EUR/USD can head back towards the day’s lows at 1.2123, then the gap fill just below 1.2100.

Source: Tradingview, City Index

The shallow retracement of the USD/JPY compared to the retracement of the EUR/USD could be looked at as a potential signal that the USD/JPY is ready to move higher if the DXY bounces again.  Watch for the flag target of 104.55 if it does break higher!

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