A stronger US dollar, driven by the Fed’s hawkish policy shift, is reshaping the FX landscape. Here are five currency pairs displaying compelling technical setups for July.
Five FX pairs you should be watching in July and why
Key takeaways
- A hawkish Warsh Fed has strengthened the US dollar as markets increasingly price in further Fed rate hikes.
- EUR/USD, AUD/USD, and NZD/USD remain under bearish pressure after breaking key technical support levels.
- USD/CAD and USD/JPY continue to favor further gains as widening US yield premiums support the greenback.
The macroeconomic landscape for the greenback has shifted gears under new Federal Reserve Chair Kevin Warsh, who officially assumed office on 22 May 2026 and helmed his first FOMC meeting in June 2026.
The reality of a “Warsh Fed” repricing
In his maiden June press conference, Warsh emphasized that “inflation is a choice”, delivering a highly compressed policy statement that slashed traditional word counts by over half to minimize overt forward guidance.
The central bank’s Summary of Economic Projections (SEP) mapped out a starkly hawkish narrative: the median Fed funds rate dot plot for year-end 2026 rose to 3.8%, from 3.4% pencilled in the prior projection made in March, with half of the committee supporting an interest rate increase later this year as core PCE inflation forecasts were bumped upward to 3.6% from 2.7% earlier.1
Fed funds futures traders have completely abandoned their previous expectations of a 25-bps rate cut in late 2026. Instead, based on data from the CME FedWatch tool as of 26 June 2026, the Fed funds futures market has priced in a 74% and 94% chance of a 25-bps rate hike at the FOMC meetings on 16 September 2026 and 28 October 2026, respectively (see Fig. 1).
Fig. 1: CME FedWatch tool aggregated FOMC meeting probabilities as of 26 Jun 2026 (Source: CME website). The information presented is historical information, and past performance is not indicative of future performance.
The US Dollar Index rose to a 13-month high
Fig. 2: US Dollar Index major trend as of 26 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The formal conclusion of the 17 June 2026 FOMC meeting has fundamentally altered the currency market landscape. In stark contrast to the tentative consolidation movements in the US dollar seen early in April to May 2026, the US Dollar Index has finally staged a major bullish breakout from a former range resistance level of 100.54, which had been in place since May 2025. It has rallied to a 13-month high of 101.37 at the close of Friday’s US session, 26 June 2026.
The revival of the current bullish tone seen in the US Dollar Index has been synchronized with the widening of the 2-year and 10-year yield spread premium between the US Treasury notes and an equal-weighted average of the sovereign bonds from Germany, the UK, Japan, Canada, Switzerland, Australia, and China (see Fig. 2).
Both the 2-year and 10-year sovereign yield spreads (US over the rest of the world) have exceeded their respective 200-day moving averages.
Hence, the arrival of new Fed Chair Kevin Warsh has catalyzed a structural repricing of the entire US interest-rate trajectory, reinforced the greenback’s yield premium, and put significant pressure on the currencies.
Let’s now focus on the five currency pairs that are displaying interesting technical configurations.
EUR/USD: Broke below 200-day moving average
Fig. 3: EUR/USD medium-term trend as of 26 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
EUR/USD has broken below the medium-term ascending channel support from the 13 March 2026 low and the key 200-day moving average (see Fig. 3).
In addition, the daily MACD trend indicator has continued to oscillate within a major descending channel since 22 April 2025 and is now trending steadily downward below its zero line.
These negative technical developments have suggested that the multi-month downtrend from the 28 January 2026 high of 1.2083 is likely intact.
Traders may monitor the 1.1610/1685 key medium-term pivotal resistance with the medium-term supports at 1.1225, 1.1090/1050, and 1.0945.
On the other hand, a clearance and a daily close above 1.1685 sees the next medium-term resistances coming in at 1.1810 and 1.1915.
AUD/USD: Coming close to a key major ascending channel support at 0.6850
Fig. 4: AUD/USD medium-term trend as of 26 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The 7-week decline of 5.5% from the 6 May 2026 high of 0.7278 has broken below the 20- and 50-day moving averages and has led AUD/USD to retest a major support level of 0.6850 (the 200-day moving average and the lower boundary of a major ascending channel from the 9 April 2025 low).
This set of technical developments suggests that the AUD/USD may be undergoing a medium-term trend change from bullish to bearish (see Fig. 4).
Traders may observe the 0.7085 key medium-term pivotal resistance (also close to the 50-day moving average), and a break below 0.6850 may expose the next medium-term supports at 0.6765 and 0.6675.
However, a breakout and a daily close above 0.7085 would bring the next medium-term resistance levels to 0.7180/7210 and 0.7265.
NZD/USD: Broke below major ascending range support from April 2025
Fig. 5: NZD/USD medium-term trend as of 26 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
Recent price action in NZD/USD has broken below the former major ascending range support from the 9 April 2025 low, which now turns into pull-back resistance at 0.5680 (see Fig. 5).
Where appropriate, traders may observe the 0.5735/5780 key medium-term pivotal resistance (also the 20-day moving average). A break below 0.5580 exposes the next medium-term supports at 0.5510 and 0.5445.
On the flip side, a reintegration above 0.5780 may indicate a failure of the bearish range breakdown and see the next medium-term resistances at 0.5860 and 0.5935 (also close to the upper boundary of the major descending channel in place since the 30 September 2024 high).
USD/CAD: Bullish breakout from major descending trendline
Fig. 6: USD/CAD medium-term trend as of 26 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
USD/CAD staged a bullish breakout on 3 June 2026 from its former major descending trendline, which had capped prior up moves from 4 March 2025 to 3 April 2026.
Traders may focus on the key medium-term support, held at 1.3945, and the medium-term resistance stands at 1.4400/4480. A clearance above 1.4480 opens the door to the 1.4690 long-term secular range resistance, which has been in place since January 2016 (see Fig. 6).
However, a failure to hold and a daily close below 1.3945 would negate the bullish tone, exposing the medium-term support at 1.3840 (the intersection of the 50- and 200-day moving averages). Only a break below 1.3840 may indicate a failure of the bullish breakout, exposing the next supports at 1.3710 and 1.3560/3485.
USD/JPY: Grinding up to retest 161.95 major resistance
Fig. 7: USD/JPY medium-term trend as of 26 Jun 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
Despite several verbal interventions by Japanese officials in the past two weeks2, following the last FX interventions by the Japanese authorities on 30 April 2026 and 6 May 2026 to negate Japanese yen weakness3, USD/JPY has continued its slow grind towards a key major resistance level of 161.95, where previous FX interventions occurred between 11 and 12 July 20244.
A bullish breakout with a daily close above 161.95 may open the scope for the next medium-term resistances at 164.18/40 and 167.00 (see Fig. 7).
On the flipside, a bearish breakdown with a daily close below 159.45 may expose the next medium-term supports at 157.85 and 155.90 (also the key 200-day moving average).
This article and its contents are intended for educational purposes only and should not be considered trading advice.
