FX snapshot – US Dollar Index, EUR/USD, GBP/USD, USD/CAD

US dollar weakness is likely to be short-lived, yet with oil breaking higher USD/CAD is looking to reverse some of the recent gains.

Canadian dollar coins and US dollar note
Source: Bloomberg

US Dollar Index pulls back but bullish outlook remains

The Dollar Index has continued to drift lower following the leg higher after the Fed’s hawkish tones on Wednesday. The price has now come back through the long-term descending trendline and $97.33 support. However, the trend remains in play, and this looks a lot like the previous retracements.

The chart has clearly been respecting the Fibonacci retracements fairly well, and thus the 61.8% retracement ($97.15) could provide some support, just like it did for the last pullback.

Ultimately I remain bullish unless the price moves back below $96.62 and will be looking on lower timeframes for a sign of a reversal higher, where the major points of resistance are at $97.39, $98.01 and $98.61.

EUR/USD retracement likely to be short-lived

EUR/USD has been retracing upwards over the past 36 hours, with the price recently coming into contact with the notable $1.1 resistance level.

On the weekly timeframe, it is clear we have broken out of a symmetrical triangle in a bearish manner, and thus further losses seem likely. With that in mind, I remain bearish and will expect the price to break lower from this current ascending channel in the near future.

I am bearish unless the price closes back above the week’s high of $1.11. Support levels for any such downturn would be likely around $1.0962, $1.0897 and $1.0819.

A potential turnaround story for GBP/USD

The GBP/USD pair has seen a nice period of upside over the past 24 hours, with a break back above $1.535 to arrest the continued lows and low highs. The key for any further upside today is whether the current retracement lower will move higher once more without moving back below this morning’s low of $1.531. Should that occur, I will be watching out for a move back towards $1.5382 and $1.5415 resistance in the near future.

USD/CAD triangle points to indecision

The USD/CAD pair has become increasingly choppy as the CAD has seen strength driven by recent oil strength. The price is now forming a symmetrical triangle, and with prices recently bouncing from the 50-period SMA and ascending trendline it is clear that we could see some strength continue this recent pattern. Ultimately I will need to see a clear breakout to gain direction for this pair. That means a move back above C$1.3237 or below C$1.3133.

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