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

Dollar sells off following jobs report, yet its strength is expected to dominate today.

GBP/USD
Source: Bloomberg

US Dollar Index likely to provide bounce today
Friday’s jobs report provided us with another batch of volatility, yet the impact to the dollar was initial strength, turning to weakness. This has brought price back to the inside trendline we have followed over the past two weeks. This provides a likely point of reversal for the bulls to come back in to play.

For this reason, I believe this is a good point to expect the bulls to come back into prominence today. My bullish bias is relevant unless price closes below the descending inside trendline (currently 97.70).

GBP/USD triangle breakout provides bearish sentiment
Last week’s break lower from a triangle provided a worrying sign for GBP/USD. However, the follow up price action has seen a gradual move lower, with steps into the crucial $1.5467-1.5447 support zone.

I need to see a close below $1.5447 to gain confidence that we are set for further losses. Should that happen, I would be looking at the $1.533 support level as the next port of call. 

USD/CNH selling likely to be short lived
The weak numbers out of China overnight point to a likely intervention from the PBoC, which would bring a likely continuation of the upside we have been seeing recently. With the losses seen in USD/CNH over the past few days the price is getting back towards the lower end of this ascending trendline.

As such, I see any move down towards the Y6.212 area as a good area for the buyers to return. I remain bullish and do expect us to break above Y6.2294 in the not so distant future. It is clear that, for now, we have minimal volatility, yet the recovery tends to be strong and quick, compared with the fortnight of small down days that follow. Thus I believe we will see another strong move higher soon.

USD/CAD spinning top leads to gains
USD/CAD saw a spinning top on Friday, with price bouncing higher from around the $1.3064 support level (2009 high).

I remain bullish despite this temporary weakness and expect a return to the near term resistance of $1.321. I will need to see a 4-hour or daily close above $1.321 to gain confidence of another leg of the move higher.

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