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FX snapshot – US Dollar Index, GBP/USD, GBP/JPY, USD/CAD

Sterling seems likely to rise once more, yet with the US dollar also looking bullish, which one will give way?

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Source: Bloomberg

US dollar fades lower yet seems likely to spike

The US dollar has been regaining some of the ground lost in the first two weeks of October and ultimately challenged the crucial $95.10 resistance level last night. Despite pulling back from this level, the fact that the price passed through it for over 30 minutes, alongside the nature of this current move lower, points towards a likely return to and break through $95.10. Support provided by a descending trendline, along with the 20- and 200-hour SMAs gives further confidence that this will happen. Thus I am bullish unless the price moves back below $94.86, with the resistance levels I am looking at coming around $95.22, $95.34 and $95.40 for the near term.

GBP/USD triangle points to further upside

Last week we discussed a possible diamond top at key trendline resistance. However, without the break this has now simply turned into a symmetrical triangle formation, which given the strong upward trending market on entry, would point towards another move higher on exit. Given the clear break above the trendline support, I expect to see a return to $1.555. The next major level above that is $1.565, yet given the clear lower highs being created in the longer term, I do not think GBP/USD will reach that level before turning lower once more. Thus I am simply bullish and expect an upward breakout towards $1.555. This view holds unless the price moves back below $1.5427.

GBP/JPY breaking higher once more

GBP/JPY has been breaking higher since hitting a major trendline support last week; something I have been talking about both in the lead up and upon the creation of this low. Today has seen the price spike higher once more, moving well clear from the ¥184.85 resistance level. I remain bullish and believe we still have a significant amount to run on this rally. However, I would be hesitant buying into a big marubozu candle like this, and thus a retracement or consolidation would be a lower risk entry point for bulls. I remain bullish unless the price moves back below ¥184.61, with the medium-term outlook pointing towards the ¥186.00 and ¥188.30 resistance levels. 

USD/CAD resurgence hits the buffers

USD/CAD has been moving sharply higher over the past two trading days, as it charges back towards the crucial Y1.308 resistance level. However, this morning has seen the price turn lower in a significant way, breaking below the C$1.301 support level. With this in mind, I expect further near-term downside today, with the price looking towards the C$1.2972 and C$1.2952 levels. However, given the strong move higher over the past two days, there is a good chance we could see this resurgence turn into something bigger. I would ultimately need to see a move back above C$1.305 to point towards further upside. 

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