Dollar strength is likely to shine through once more, yet fundamental news has the potential of altering the state of play for GBP/USD and USD/CAD.

Pound dollar
Source: Bloomberg

GBP/USD sets tone for bullish phase

Yesterday saw GBP/USD break above an ascending trendline from April and with it created a new high, punching above the 6 July peak of $1.563. Ultimately, these two moves point to a clear uptrend in play and thus the price action seen last week has been confirmed as a bottom.

Despite the likeliness of some form of pullback in the near-term, I am bullish and would expect to see a move back towards $1.593 by the end of next week. Any retracement lower would give good buying opportunities, with the main support levels I am watching coming at the ascending trendline (currently $1.5636), $1.559 and $1.5552.

Be aware that the UK jobs report will being released today and thus there is a chance of major fundamentally-driven price action.

USD/JPY breaks out of wedge to bring bullish outlook

Despite the break lower last week, USD/JPY has recovered and moved out of the top end of the June falling wedge pattern. Yesterday saw a temporary move lower, which sought to find new support at that previous resistance trendline. Despite it not fully managing to hit the trendline, I still see this as a sufficient move and expect further bullish price action to follow soon.

The ¥123.73 resistance point is absolutely crucial here as a move above this level would bring a new high to negate the 8 July lower low. As such, I am waiting for a break above ¥123.73, which if it occurs would provide a bullish outlook for a move towards the ¥124.38 and ¥125.86 resistance. 

NZD/USD expected to fall in today’s session

NZD/USD has been slowly moving lower following the shift higher that occurred last week. The long-term downtrend remains within place and as such, I would expect to see us resolve this current phase with a continuation of this. However, for the time being, we have both a major support ($0.6663) and descending channel (currently $0.6650) in view.

What I can say in confidence is that we are very likely to move to at least the $0.6663 level today and then the reaction to one or both of these levels.

Thus I am bearish for the current session, with a move back to those support levels at which point we will judge again given its response to support.

USD/CAD flirts with a breakout for another leg higher

USD/CAD has been consolidating in the past week following a strong uptrend throughout mid-June to mid-July. For that reason, the most likely end to this period of consolidation is towards the upside. Yesterday’s temporary break above C$1.2772 points towards a willingness to do just that.

Overnight we have seen price hold up upon the 20-period SMA, which has been a crucial support indicator earlier in July. Thus I am bullish while price is above this SMA and do expect us to break to a new high today. Be aware that the C$1.2756 resistance level is in sight, which represents the March peak and six-year high.

I am bullish, yet am mindful that we could see some selling and profit taking at C$1.2752. Be aware that the Bank of Canada will be announcing its latest monetary policy decision today and thus there is a chance of major fundamentally-driven price action.

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. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.