CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Dollar weakness boosts EUR/USD and GBP/USD, while USD/CAD turns lower

The dollar continues to weaken, lifting EUR/USD, and GBP/USD, while USD/CAD looks likely to continue its wider bearish trend.

EUR/USD starts to regain ground after latest decline

EUR/USD has been a consistent underperformer of late, with the latest declines taking the pair into a fresh five-month low last week. However, we are continuing to build on that rise seen last week as price passes through trendline resistance. That does point towards the potential for further short-term upside, yet we are likely to be seeing a retracement phase rather than an all-out reversal.

With that in mind, short-term upside is likely to provide a selling opportunity. Particular interest comes around the 61.8% and 76.4% Fibonacci levels ($1.188-$1.1921) for a potential bearish reversal. Ultimately, whether we see a deep retracement or not, a bearish wider outlook remains unless price rises through $1.20 resistance.

GBP/USD rises towards Fibonacci resistance

GBP/USD has also been gaining ground, with the pair pushing towards the 76.4% Fibonacci resistance level at $1.3935. The recent trend of lower highs thus comes into play, with a bearish reversal still possible around that impending resistance level.

A move below the $1.3811 low add greater credence to the notion that this latest rise is simply a retracement before we head lower once again. Ultimately, we would need to see a break through $1.4017 to break from the recent bearish trend and bring a resumption to the uptrend that dominated the past year.

USD/CAD likely to continue its recent decline

USD/CAD has turned lower from trendline and Fibonacci resistance (76.4%), with the pair looking to continue the downtrend that has dominated the past year.

A short move higher in early trade does little to change that bearish view, with the recent breakdown looking likely to continue from here. With that in mind, bearish positions are favoured from here. A rise through $1.2595 would be required to negate the bullish intraday trend that is gradually building from this 76.4% Fibonacci reversal.

This information has been prepared by IG, a trading name of IG Markets Limited. 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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