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

With oil rallying, we are starting to see continued strength for the commodity currencies like AUD and CAD. How long will this last?

GBP/USD currency cross
Source: Bloomberg

EUR/USD rally comes into question
EUR/USD has been a big performer this week, rallying towards last week’s highs of $1.0976. However, a sharp selloff overnight is bringing this strength into question.

The crucial level to watch here is $1.0869, where a break below would indicate a likely beginning of the move back down through initial support levels of $1.0859, $1.0834 and $1.0808. An inability to break back through $1.0869 would mean that the uptrend remains intact and thus we could see another bounce in turn.

Therefore look for short-term bullish reversal signals. Resistance levels of $1.0916, $1.0922 and $1.0944 would be the next major levels to the upside.

GBP/USD forming rising wedge
GBP/USD has started to see some strength return this week, with a descending wedge break earlier in the week, seemingly leading to a bigger rising wedge currently. The pair appears to be selling back down from trendline resistance and the key level here is $1.4333 where a break below would create an intraday double top, leading to a likely return to the bottom end of this pattern.

Ordinarily a bearish pattern, the trendline is absolutely key here, as a break higher would create a bullish inverse head and shoulders pattern. As such, an hourly close below $1.4333 or up through $1.4413 will determine direction for this pair.

AUD/USD pullback unlikely to last
AUD/USD bulls are coming back to the fore this week, with the pair trending higher in a relatively consistent manner. We are seeing weakness come back into play, yet given this trend, it is likely we will return to the trend once more and break back through $0.7141.

As such, we will be watching for short-term bullish reversal signals as we get closer to the $0.7069 swing low. Only a move back below that level would negate this bullish view. Key resistance levels are $0.7141, $0.7170 and $0.7215.

USD/CAD continues downturn
USD/CAD is continuing to move lower, in what is as much of a play on strong oil prices as anything. For now, this pair is bouncing higher, yet it seems highly likely that another leg lower is just around the corner.

With trendline resistance and the C$1.4055 level in view, there is a good chance we will see another selloff in the near future. A closed hourly candle back above C$1.4157 would call this bearish view into question. Key support levels are at C$1.3947 and C$1.3816.

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