A jolt from the Federal Reserve and a shift in risk sentiment unleashed sharp volatility across forex markets. The U.S. dollar’s sudden surge on Wednesday into Thursday powered big trend reversals in major pairs. The euro and Australian dollar were pummeled to multi-week lows, while the Canadian dollar sank as USD/CAD spiked to fresh highs. This backdrop of a hawkish Fed tone and risk-off mood set the stage for whipsaw price action on the 5-minute charts of EUR/USD, USD/CAD, and AUD/USD. Below, we break down each pair’s technical journey on July 31 and what it could mean for traders going forward.
EUR/USD
EUR/USD unraveled in a steep sell-off, plunging over 150 pips from its early Wednesday highs in the mid-1.1500s to just above the 1.1400 handle by Thursday morning. The pair’s tone shifted from a mild uptick into a free-fall once it broke below 1.1500 support, a level that had propped up prices earlier in the week. An initial wave of selling around mid-session accelerated into a cascade of large red 5-minute candles, showing relentless bearish momentum as U.S. dollar strength dominated. Volatility spiked dramatically – the sudden range expansion and long bearish candlesticks signaled capitulation by euro bulls.
Key Levels & Price Action
The technical damage was clear. 1.1500 – a psychological and intraday support – turned into resistance after the breakdown. A brief bounce in the New York afternoon failed near 1.1480, roughly the underside of the prior support, illustrating a bearish retest (a classic dead-cat bounce). From there, EUR/USD staged a second leg lower. It sliced through 1.1450 and didn’t find real buyers until just above 1.1400, where the sell-off finally met a floor. Notably, candlesticks around 1.1400 showed long lower wicks, reflecting buyers cautiously stepping in to absorb the sell orders. Momentum then shifted slightly – a rounded bottom began forming on the M5 chart as the worst of the sell-off passed. By early Thursday, the euro had stabilized in the mid-1.14s with a series of higher lows hinting at waning bearish force.
Outlook
Despite the modest bounce, EUR/USD’s structure remains weak. The trend is down unless the pair can reclaim the 1.1500 region. Traders should watch if 1.1400 support holds on retests – a sustained break lower could open the door to further downside (next support around 1.1350), whereas a recovery above 1.1480–1.1500 would signal a possible bullish correction. For now, the bias is cautiously bearish, with consolidation likely as the market digests the euro’s tumble.
USD/CAD
USD/CAD was the mirror image, exploding upward as the greenback gained broad strength. The pair climbed in a persistent uptrend through Wednesday, then burst into a vertical rally late in the day. Once USD/CAD punched above the 1.3800 threshold – a level that had contained earlier advances – it triggered an aggressive breakout. In a matter of minutes, prices rocketed from the low-1.38s to about 1.3840, marking the highest level seen in weeks. This surge unfolded in a large bullish 5-minute candle (a news-fueled spike likely on the Fed’s signals), reflecting extreme volatility and eager buying interest. The Canadian dollar’s weakness was evident as even strong resistance levels fell away under the onslaught of USD momentum.
Consolidation & Levels
After peaking near 1.3840, the rally paused. The chart shows that USD/CAD pulled back slightly from its spike high, but importantly, no deep reversal ensued – a sign that bulls held their ground. Instead, the pair entered a sideways consolidation just under the high. Volatility subsided into smaller candlesticks, and support formed around 1.3800–1.3810, which is the breakout level now acting as a floor. Each dip toward 1.3800 was shallow, with buying wicks visible, indicating buyers defending that new support. On the upside, the 1.3840 spike high represents immediate resistance; the price action shows hesitation and possible double-top formation as attempts to re-test that high were limited on the first pass. Still, higher lows into Thursday suggest an ascending triangle-like pattern might be building intraday – often a continuation signal.
Outlook
The bias for USD/CAD stays bullish overall. The strong breakout and tight consolidation near the highs imply that bulls may be gearing up for another push. If 1.3840 is decisively cleared, the pair could extend gains towards the mid-1.38s or even 1.3900. However, failure to break the high, combined with any loss of the 1.3800 support, would warn of a deeper pullback – perhaps retracing to 1.3750 (the last swing low area before the breakout). Traders should monitor if this rally has more legs or if profit-taking will induce a short-term correction after such a one-way move.
AUD/USD
The Australian dollar suffered a dramatic intraday collapse against the U.S. dollar, reflecting its sensitivity to the risk-off wave. AUD/USD climbed early on Wednesday, briefly touching the 0.6520s in a morning rally, but that strength faded fast. Once broader USD buying took hold, the pair reverse-flipped into a steep downtrend. Selling pressure hit in two waves: first, a slide from the 0.6520 area down to around 0.6480 by mid-session, and later an even sharper plunge in the U.S. afternoon that cracked the pair down to the 0.6430 zone. The latter move was punctuated by a series of oversized red candles, one after another, as stops were triggered and momentum selling took over. By the evening, AUD/USD had shed roughly 90 pips from its session high – a massive move for a 5-minute chart – showcasing extreme bearish volatility. The speed and ferocity of the drop signaled a rush to safety out of the Aussie.
Base Formation & Recovery
Down at 0.6430, the sell-off finally met strong demand. The chart shows a double-bottoming pattern around that level: the initial low around 0.6430 was tested again shortly after, but sellers could not push to a new low. Instead, candles began showing bottom wicks and bullish engulfing patterns, implying seller exhaustion and dip-buying by opportunistic traders. From late Wednesday into early Thursday, AUD/USD carved out a W-shaped recovery. A gradual series of higher lows and higher highs on the 5-minute timeframe indicated that the pair was in recovery mode, albeit off a very deep low. By Thursday morning, it rebounded into the 0.6460–0.6470 area – still far below its 0.6520 peak, but a solid bounce nonetheless. Notably, around 0.6480 (a prior intraday support turned resistance), the recovery momentum hesitated, suggesting that level is now a near-term barrier.
Outlook
The broader trend for AUD/USD remains bearish, given the profound drop, but the emergence of a base hints at at least a temporary relief rally. If the pair can build above 0.6480, bulls might extend the rebound toward the 0.6500 psychological level, where tougher resistance and the downtrend’s origin await. Conversely, failure to sustain the bounce – especially a break back below 0.6430 – would re-expose the recent lows and could resume the downtrend. With sentiment still shaky, traders have a cautious eye on the Aussie; any uptick may be viewed as an opportunity for sellers unless fundamental cues shift. In the near term, expect choppy consolidation between 0.6430 and 0.6500, with a bearish bias until proven otherwise by a stronger reversal.
Overall Summary
Across all three pairs, a common narrative prevailed: U.S. dollar strength and heightened volatility set the tone. The Fed’s hawkish undertones and a wary market mood drove the euro and Aussie into retreat and propelled USD/CAD upward. Each chart, despite different directions, reflects the same theme of a powerful USD impulse dictating intraday trends. Traders witnessed critical support breaks (EUR/USD, AUD/USD) and forceful breakouts (USD/CAD) in tandem, underscoring a market-wide re-pricing of currency values. Looking ahead, the broader sentiment appears tilted in favor of the dollar until countervailing catalysts emerge. While some pairs may see corrective bounces or cooling of momentum after the outsized moves, the strategic bias heading into the rest of Thursday remains: respect the prevailing trend. Currencies that plunged could stay under pressure at lower levels, and the pair that spiked might hold its gains – at least until fresh news or data gives traders a new direction. In sum, the day’s dramatic swings have reset key levels across EUR/USD, USD/CAD, and AUD/USD, and market participants will be watching those technical lines in the sand as the dust settles on this wave of dollar-driven volatility.