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FX Snapshot – US Dollar Basket, USD/CAD, GBP/USD, AUD/USD

US dollar upside fades as we await direction, with both the dollar index and GBP/USD rangebound for now.

Dollar and pound
Source: Bloomberg

US dollar recovery begins to fade below $95.10

The US Dollar Basket has begun to consolidate below the $95.10 resistance level, following a strong recovery late last week. As mentioned, this level is crucial to determining whether we are going to see the dollar index push higher or roll over and thus the resolution of this sideways price action will have longer term implications.

The selloff we are currently seeing points towards a move back to the lower end of this current $94.74-$95.10 range. However, given that we are no longer creating new highs and have broken below the $94.86 level I was watching yesterday, I believe it better to either play the range or else await a bullish break and close above $95.10, or a bearish break and close below $94.74.

US Dollar Basket chart

USD/CAD pushing higher following pullback

Yesterday saw the pullback we were expecting for the currency pair to the C$1.2952 support level. However, interestingly, despite not particularly respecting the C$1.2972 level on the way down, it has subsequently used it as a base to move higher once more this morning. 

The big question is whether the pair can regain the C$1.305 and C$1.3081 levels. For now I am bullish, but am also wary of a retracement back towards the ascending trendline or C$1.3 support level.

Thus I am bullish but see any move lower as likely to be temporary. My bullish view would hold unless price closes back below C$1.2968.

USD/CAD chart

GBP/USD widens range with bounce off key support

GBP/USD has moved outside the confines of the triangle formation we were watching yesterday, instead trading within a rectangle range between $1.5415 and $1.5509.

I continue to be bullish given the entry into the pattern but it would make more sense to watch for a breakout for any directional trades and until then play the range.

With that in mind, I am looking for a move higher from here, with my bullish view holding unless price closes back below $1.5415.

GBP/USD chart

AUD/USD crashing lower, yet support in view

AUD/USD has been moving sharply lower this morning, losing 62 points in less than three hours. However, despite the bearish implications of this selloff, price is now approaching the $0.72 support level, which represents the biggest challenge to this move lower yet.

As such, I am looking for signs of a short-term recovery around $0.72 using the lower timeframes. A close below $0.72 would point towards further losses and a possible move towards $0.7165.

However, any bounce from $0.72 would be looking towards $0.7215 as the first resistance level.

AUD/USD chart

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