The US Dollar Is Breaking Down Across Five Currency Pairs

Currency work usually gets treated as a set of separate problems. The euro answers to the ECB. The Canadian dollar tracks crude, the yuan tracks policy, the Aussie tracks China. Chart them one at a time and you get six unrelated stories.

Run all six in a single sitting and something else surfaces. In his latest Pro Charts: Currencies breakdown, Lawton Ho works through the major dollar pairs and finds five pointing the same way, most of them through a break in the trend structure that had been holding the dollar up.

The repetition is the signal. One pair breaking down is a pair-specific story. Five pairs with different central banks, different growth profiles and different correlation histories breaking in the same direction points at the one variable they hold in common.

One note on convention: Ho charts these with the dollar as the base, so the levels below read as pounds or euros per dollar, not the familiar inverse.

The Cleanest Breaks Are in Sterling and the Euro

USD/GBP had been grinding lower inside a set of converging trend lines, the kind of compression that reads as a wedge depending on how you draw it. Ho notes that the compression appears to have resolved lower, with the move favoring further dollar weakness for now. Either the dollar is softening, sterling is firming, or both.

First support sits near 0.73, roughly one percent lower. Below that is the pivot low, the weakest the dollar has traded against sterling this year. Hold those and the breakdown is a shakeout. Lose them and the downtrend gets a new leg.

The euro tells a near-identical story with a different pattern. USD/EUR broke down from a well-defined upsloping trend line, and Ho maps support at the 0.84 to 0.85 pivot, then a second shelf just under 0.83. That second level sits two to four percent lower. A bounce off either is reasonable, and a retrace back into the broken structure would not be unusual. But the structure itself now favors the downside.

What matters is that these are two independent pairs producing the same setup. Sterling and the euro are not the same trade.

The Canadian Dollar Carries the Most Defined Objective

USD/CAD is where the structure gets specific. Ho points to a clean uptrend that has now broken through a pair of head and shoulders formations stacked in the same zone. Taking the measured move off the more prominent of the two projects a target near 1.37.

That is the most concrete downside objective in the entire set. Most of the other pairs offer support zones and pivot references. This one offers a pattern with an arithmetic implication attached to it. Nearer term, Ho identifies support around 1.38, which is where the first real test of the move should come.

Head and shoulders patterns fail often enough that the measured move should be treated as a projection, not a destination. The other dollar pairs do not validate 1.37 specifically, but their simultaneous breakdowns give the bearish USD/CAD structure broader confirmation.

The Slower Pairs Are Doing the Same Thing

USD/CNY continues to grind toward the 2022 and 2023 lows, and Ho expects support to show up around 6.70. If price cuts below that area, Ho would begin watching for a potential bounce rather than automatically treating the break as continuation.

USD/AUD broke a solid uptrend and is building a downtrend of its own. Support comes in near 1.39 to 1.3950.

Neither is a high-conviction setup on its own. Their function is confirmation. They are moving the same way as the pairs that do have clean structure.

The Yen Is the Exception, and That Is the Test

USD/JPY is the one pair not participating. Ho describes the sequence as the dollar reaching prior highs against the yen, followed by Japanese government intervention aimed at pulling it back. Price has since retraced roughly half of that decline and is sitting at the fifty percent level.

Ho raises the possibility that this is a bear flag forming, and that a break of the current uptrend could resolve lower. But he is direct about the offsetting problem: Japan's structural position is weak, and a weak underlying economy limits how much the yen can appreciate regardless of what the dollar does elsewhere.

That makes the yen the cleanest test of the broader thesis. If USD/JPY eventually rolls over with the rest of the complex, the dollar-weakness read is broad and structural. If it holds while the others break, the weakness is relative rather than absolute, and the trade becomes about which currency is on the other side rather than about the dollar itself.

Key Levels to Monitor

Pair Level Significance USD/GBP ~0.73 First support, roughly 1% lower USD/GBP Year's pivot low Weakest dollar reading vs sterling this year USD/EUR 0.84 to 0.85 Pivot support after trend line break USD/EUR Just below 0.83 Second shelf, 2 to 4% lower USD/CAD ~1.38 Near-term support USD/CAD ~1.37 Head and shoulders measured move projection USD/CNY ~6.70 2022 and 2023 lows, potential bounce zone USD/AUD 1.39 to 1.3950 Support on the new downtrend USD/JPY 50% retracement Current level, bear flag in question

What Confirms and What Invalidates

Confirmation is straightforward: the support levels above give way rather than hold. Sterling through the pivot low, the euro through 0.83, USD/CAD through 1.38 toward the projection. Invalidation is equally readable. If those supports hold and price retraces back up into the broken trend lines, the breaks become failed breaks, and failed breaks in a compressed structure can run further than expected in the opposite direction. The yen sits outside both and resolves a different question: whether this is a dollar story or a set of foreign-currency stories that happen to point the same way.

None of these breaks is spectacular on its own. Read together, across economies with no particular reason to move in lockstep, they describe a dollar losing structure on several fronts at once. Ho's read on the session is that the dollar looks likely to be weakening against most of these pairs, with the yen the standing exception. The levels above are where that gets tested.