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Haven dollar demand drives EUR/USD, GBP/USD and USD/CAD

Haven flows help the dollar, while looks likely to gain further within EUR/USD, GBP/USD, and USD/CAD.

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EUR/USD breaks key support amid dollar resurgence

EUR/USD slipped back below the $1.1688 support level yesterday, bringing an end to the more bullish outlook seen of late.

The prior break through $1.1832 did provide a potential bullish signal, yet the risk of a wider retracement of the $1.2011-$1.161 did remain. With the price having broken below $1.1688, it looks likely that the recent rally was such a retracement, with further downside looking likely from here. With that in mind, a bearish outlook is in play unless the price breaks through the $1.1759 swing high.

EUR/USD chart Source: ProRealTime
EUR/USD chart Source: ProRealTime

GBP/USD falls back towards key support level

GBP/USD has similarly been on the decline, with the dollar resurgence seen over the course of the week bringing us back towards the crucial $1.2863 support level.

A break below that point would signal an end to the recent trend of higher lows, bringing a more bearish picture once more. Thus the ability or inability to break below $1.2863 will dictate the short-term outlook for this pair.

GBP/USD chart Source: ProRealTime
GBP/USD chart Source: ProRealTime

USD/CAD looks likely to rise once more

USD/CAD has been on the rise as a double whammy of weaker energy prices and risk-off sentiment helping to accelerate the reversal of a long-standing downtrend. The rise through $1.3259 provides the completion of a bullish double bottom formation, with the price subsequently heading towards the $1.342 breakout level.

While we have not seen that level taken out yet, there is a good chance we will continue to move higher after this recent retracement. As such, further upside looks likely, with a decline below $1.3278 required to bring about expectations of a more drawn out retracement stage. Until then, this recent resurgence looks likely to continue apace.

USD/CAD chart Source: ProRealTime
USD/CAD chart Source: ProRealTime

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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