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

Short-term dollar strength could be on the cards for EUR/USD and GBP/USD, yet the trend remains firmly against the greenback.

EUR/USD notes
Source: Bloomberg

EUR/USD breaking lower from channel

EUR/USD is heading lower this morning dropping out of a rising channel. Given the sharp rally at the back end of last week, this current pullback seems like a breather before the pair charges higher once more.

However, should we see the pair break below the $1.1635 level, it would point towards a more protracted move, with the Fibonacci retracements drawn from $1.1479 coming into play. On the other hand, should we not break below $1.1635, it would point towards simply a slowing of the uptrend rather than a protracted break from it, with further gains likely to ensue.

GBP/USD gradually regains ground

GBP/USD has seen a volatile morning, with initial losses being recovered. The rising wedge pattern we can currently see is a bearish pattern, where a break above $1.3053 would be required to negate the possibility of another move lower.

However, given the weakness we have seen leading into this current wedge, the triangle of resistance up ahead (confluence of the 76.4% retracement and two trendlines), it seems likely that we will see GBP/USD turn lower once more. That being said, the medium term remains bullish, and as such, any further downside in the short term could result in another leg higher.

USD/CAD continues to channel lower

USD/CAD is grinding lower this morning, following on from yet another leg lower for the pair on Friday. This downtrend has lasted for almost three-months now, and as such, it should not necessarily be too worrying that we are seeing such consistency of selling recently.

With the expectation of further downside, any rally towards the 50-hour simple moving average (SMA) would provide a bearish selling opportunity. Thus the short-term bearish outlook remains in place unless we break through the $1.2609 swing high.

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