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FX levels to watch – EUR/USD, GBP/USD and USD/CAD

The dollar continues to strengthen against European currencies, while USD/CAD is trading at a crucial range top, which will define the bias going forward.

Source: Bloomberg

EUR/USD back in bearish mode

EUR/USD managed to post a short-term rebound into the middle Bollinger band, the 20-day simple moving average (SMA), yesterday. However, with the clearly defined bearish theme in play, this move proved short-lived as the price turns lower in the direction of the current prevailing trend evident over recent weeks.

We expect to see further losses come into play moving forward, while we need to see a break below $1.1554 to translate this bearish short-term trend into a wider long-term bearish picture. A break above $1.1837 would be needed to negate this bearish short-term outlook.

GBP/USD drifting lower, with the price still at Fibonacci support

GBP/USD is also trending lower in the near term, with the 20-day SMA similarly proving a good selling tool once again. This pair has already broken from the wider bullish trend on the longer-term charts, with the current downturn providing an extension of the double top breakdown seen since crossing the neckline a month ago.

With the price trading around the 76.4% retracement of the rally from $1.3039, there is a possibility that we could see some support play out. However, the most likely event is that we continue on this trend, where a break above $1.3492 would be needed to ask questions of this short-term bearish outlook.

USD/CAD trading at crucial resistance zone

USD/CAD has been trading within a range over the past two weeks, with the price largely confined to the $1.2925-$1.2749 zone. However, with the price back at the top of this range, we are looking at a pivotal moment for the pair, where we must either reverse lower or break out.

With that in mind, watch for shorter-term intraday signals to provide further clues. An hourly close above $1.2825 would signal a bullish outlook. However, a bearish intraday candle pattern from here, and in particular a break below $1.2870, would signal another bearish phase to continue the range.

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