4 Major Currency Charts: Dollar Strength, Aussie Diverges

The setup that matters most in currencies right now did not happen this week. It happened in January — and it’s still playing out.

On the week of January 26, the US dollar index (DXY) printed a massive weekly bottoming tail. That single candlestick formation, holding the lower boundary of a well-defined parallel channel, has become the structural anchor for the entire currency complex. Because all major currencies are priced against the dollar, a weekly reversal signal of that magnitude doesn’t stay isolated to one chart. It propagates across the board — and that’s exactly what’s unfolding now.

Why the DXY Chart Sets the Direction

The DXY bottoming tail from January is not an incidental data point. It represents a session where sellers pushed price to the lower range of the channel, only to see buyers absorb the pressure and close the week well above the lows. On a weekly chart, that kind of rejection usually means something.

Since that print, the dollar has worked its way back into the upper half of the channel. On the daily timeframe, price is now consolidating in a bullish structure — a pattern that typically implies a continuation break higher rather than a reversal back down. The next significant resistance sits at the upper boundary, just above 100, at approximately 100.70.

If the dollar reaches that level, the downstream implications for GBP, EUR, and AUD are not subtle.

GBP/USD and EUR/USD: Two Charts Telling the Same Story

Both the British pound and the euro printed weekly topping tails the same week the dollar put in its weekly bottom. That wasn’t coincidence. It was the same dollar move showing up from the other side of the trade.

On GBP/USD, price has since retraced to the mid-range of its prior consolidation zone but has not reclaimed the topping tail high. The picture at current levels shows two layers of resistance stacked tightly together: the weekly topping tail zone itself, and a declining trend line that connects the April 2018 pivot high through the February 2021 highs. That line now sits around $1.386–$1.390. Getting through both of those levels in sequence is a significant ask for sterling bulls. First support on the way down is at $1.30.

The euro is in a structurally similar position, and in some ways a more instructive one — because the declining trend line there has been tested, touched, and rejected multiple times. The line dates back to a February 2021 pivot and has held as resistance on each approach. Current resistance sits at approximately $1.18. Support is layered below: a speed bump near $1.14, with more meaningful footing at $1.112. If price drops to that lower level and builds a base, the setup to reattack the declining trend line becomes viable again. A clean break above $1.18, though, would open a run toward $1.22.

The AUD Divergence: A Useful Tell

The Australian dollar did not follow the same script in January. While GBP and EUR printed topping tails in sync with the dollar’s bottoming tail, the AUD kept pushing higher — then pulled back briefly before pushing higher still. It’s holding relative strength.

That divergence matters. AUD strength while EUR and GBP stall typically signals capital is still comfortable with risk exposure and commodity-linked assets. If AUD starts rolling over too, that would suggest the dollar strength is broadening beyond Europe. Right now, AUD/USD is pressing against the 50% level of its channel structure — the ceiling. The key threshold is $0.720. A weekly close above that level increases the probability of a move toward $0.755. Below it, and the pair stays range-bound, with support at $0.695 and a deeper structural floor near $0.616 at the lower trend support — a level that originates from the COVID lows in March 2020.

What to Watch

The near-term signal to monitor is whether the DXY can break above its current consolidation zone and push toward the 100.70 channel top. If it does, expect the pressure on GBP and EUR to reassert — particularly given the layered resistance those pairs are already navigating. The AUD situation is worth watching separately, as its continued relative strength or a rollover through $0.720 would offer additional information about the broader risk backdrop.

The structure here is clean. Weekly bottoming tail on the dollar. Weekly topping tails on the European pairs. A diverging Australian dollar that still hasn’t confirmed the same weakness.

That kind of alignment — same signal, same week, across multiple correlated pairs — is exactly the kind of cross-asset confirmation that raises the probability of the underlying thesis. The dollar’s channel direction is the first input. Everything else follows from there.