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

EUR/USD and GBP/USD regain some ground following a sharp selloff on Friday, yet both seem doomed to fail as US dollar strength returns.

Source: Bloomberg

EUR/USD retracing higher

Friday’s sharp selloff in EUR/USD led the pair back onto a bearish pathway and despite the rally early this morning, further downside seems likely.

Currently coming into $1.0859 resistance, we are seeing long upper shadows on the past two candles which highlights possible weakness. However, for us to resume the downtrend, we would need to see a close back below $1.0824, bringing support levels of $1.0808 $1.0789 and $1.0777 into play.

Until that happens, this retracement higher could easily continue, with $1.0859, $1.0869 and $1.0883 as key resistance levels.

GBP/USD rally seems doomed to fail

GBP/USD's resurgence fell short last week, breaking lower from a rising wedge formation. This move back below $1.4230 provides a more bearish view and thus the rally we are currently seeing is likely to be a retracement of Friday’s move rather than a bullish reversal.

As such, it is worth watching out for bearish reversal signals within this current rally. Key resistance levels are $1.4286, $1.4313 and $1.4333. Support levels are at $1.4270 and $1.4230.

Will AUD/USD bulls return?

AUD/USD retraced heavily on Friday, following on from a very strong week for this pair, which broke to a three-week high.

The four-hour chart shows a clear hammer candle, with the low at the $0.7044 support level. This would mark a good bottom for this recent retracement.

As such, another bullish move is expected for this pair today, with an hourly close above $0.7088 the bullish signal needed to continue the uptrend. In that case, the next major resistance levels are $0.7141 and $0.7170.

We would need to see a close below $0.7000 to really undermine this uptrend. However, a close below $0.7044 would certainly provide question marks. 

USD/CAD within triangle formation

USD/CAD has been moving sideways over the past three trading days, forming a symmetrical triangle formation.

Given the strong move lower coming into this pattern, the breakout seems likely to come to the downside. However, it is worth waiting for the breakout and close through the first key support or resistance levels.

As such, an hourly close below C$1.3967 would bring a renewed bearish view, with C$1.3947 and C$1.3812 the next major support levels. Alternately, a closed hourly candle above C$1.4109 would bring a bullish view towards resistance levels of C$1.4157, C$1.4176 and C$1.4334.

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