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

After dollar strength yesterday, we are seeing some small reversals today, but the outlook for a number of pairs appears to have turned dramatically.

Pound coin and dollar notes
Source: Bloomberg

GBP/USD set for further losses
Yesterday’s disappointing manufacturing PMI reading set the stage for losses in cable, and with the failure to break $1.4670 once again it looks like the pair is in for an extended move lower on the daily time frame.

Intraday, however, the pair is oversold, so with a bearish outlook in mind, we should wait for a bounce to materialise, perhaps up to $1.4620, before looking to short the pair. A close above $1.47 would likely invalidate the bearish hypothesis. 

EUR/USD looks to push higher
​The pair has seen the first real dip in the upward trend that began on 25 April, so if the pair can move above $1.15 again today that would signal that the buyers are still in control, with an initial target towards yesterday’s peak around $1.16.

A break below $1.1450 would be a bearish development, and mark the beginning of a possible sequence of lower highs and lower lows. For now the jury is out, but we could still see a push higher here in the short-term.

USD/CAD builds on yesterday’s recovery
It looks like this pair is headed higher for the time being, with the recovery above C$1.2562 yesterday and general dollar strength alluding to the possibility of more gains.

However, with the intraday chart overbought some profit-taking could be in order. Thus, we would look to buy dips as they occur, perhaps with a move down towards C$1.26 in the short term. Upside targets are C$1.28 and then C$1.30 for any bullish move. 

AUD/USD moves lower
On the daily chart the picture is still resolutely bearish for the pair, so traders should be looking to sell into strength. For the time being, the picture is the reverse of that for USD/CAD, namely the price is oversold on an intraday view.

While this would not preclude further downside, it might make sense to wait for the price to rally, perhaps in the direction of $0.7550 or even higher. With risk appetite recovering today, bears may be best served by biding their time for the moment.  

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