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

The dollar’s resurgence is coming back into the fold, with EUR/USD and GBP/USD weak and USD/CAD strong. Do these moves have legs?

Teller counting euro and US dollar notes
Source: Bloomberg

Which EUR/USD trend will win out?

EUR/USD surpassed the 76.4% retracement, with a second break below the level in 24 hours. Clearly, we have a downtrend in place this week so far. Yet with an uptrend throughout 2017, and a potential downtrend on the long-term, the picture is perhaps not as simple.

Crucially, the determinant of where this market is going will come down to the ability, or inability, to break below $1.0620. An hourly close below that level would provide a sign that we are seeing a bearish reversal in play. Meanwhile, intraday bullish reversal patterns could provide us with the clues if we are set to continue the recent ascent.

GBP/USD rebounds after double top pattern

IN_GBPUSD broke back above the $1.2412 double top neckline overnight, with the price starting to gradually move lower this morning. The difficulty here is the current swing highs created on the descent over recent trading days, and it simply looks like we are retracing the pullback from $1.2706.

As such, given the shallow nature of this pullback, alongside yesterday’s sharp rally, another short-term leg higher looks like a distinct possibility. Should that occur, $1.2599 and $1.2622 look particularly interesting for possible areas of weakness. A break back above $1.2706 would resume the bullish outlook in place over recent weeks.

USD/CAD triangle to provide ST bias

USD/CAD has broken higher in a convincing manner over the beginning of this week, with price now trading within a symmetrical triangle. The triangle we are currently trading within should provide the next clue, with an hourly close below $1.3152 suggesting we could be in for a deeper retracement towards the $1.3110 region.

Alternately, an hourly close above $1.3201 would be a strong bullish continuation sign for another leg higher.

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