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

Recent trends come under pressure, with the USD/CAD breaking and GBP/USD turning lower from trendline resistance. Is this a sign that we could be about to see dollar strength return?

Canadian dollar
Source: Bloomberg

EUR/USD gradually regaining ground

EUR/USD pushed higher from the crucial $1.1616 support level on Wednesday, with the pair reaching a new high. That has continued the recent uptrend and points towards further gains.

While we have seen a pullback since, the price has come into and respected the 76.4% retracement. Thus as long as we do not break back below $1.1616, further upside seems likely from here.

GBP/USD pulls back within wedge

GBP/USD has turned lower from the top of a wedge formation, with the price now heading towards the lower bound. Given the proximity to the apex, we are likely to see a decisive break soon enough, and given the rising nature of the wedge, theory would dictate that the break should occur to the downside.

However, we would need the price action to confirm that, and as such there is a good chance we will bounce once more from trendline support. That being said, if we see an hourly close below $1.2999, it would provide a bearish outlook for a move back into the $1.2900 region. 

USD/CAD breaks higher from channel

USD/CAD has broken higher from its recent descending channel, with the price moving through the first swing high of $1.2544. Crucially, we have now seen the price move into and respect the 50-period (four-hour) simple moving average (SMA), which has provided key resistance back on 12 July.

As such, the short-term outlook remains bearish, yet we need to see whether the pair is going to break below $1.2414 (bearish trend continuation) or above $1.2576 (bullish reversal) to dictate the state of play.

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