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

The dollar sell-off has continued apace, with GBP/USD and EUR/USD rallying sharply yesterday. With USD/CAD also heading lower, there is little evident that we will see the trend change quite yet.

US dollar
Source: Bloomberg

EUR/USD turning lower following sharp rally

EUR/USD is beginning to drift lower, off the back of a sharp rally throughout yesterday’s session. It is difficult to know where exactly this pullback will come into, but the view is that we will push higher, through $1.1845 once more rather than break below $1.1723.

As such, a deeper retracement would be preferred as a buying opportunity, with the 61.8%-76.4% region ($1.1770-$1.1752) an ideal area for longs if we reach it.

GBP/USD breaks through key trendline resistance

GBP/USD broke through two major ascending trendlines yesterday, bringing with it significant bullish connotations. This has taken us out the top of a bearish wedge formation. The pair is looking likely to retrace somewhat today, considering the size of yesterday’s rally.

However, any pullback would be seen as an opportunity to buy at a better price, with a drop below the $1.3097 mark required to negate this bullish view. 

USD/CAD continues its descent

USD/CAD is heading lower once more following a rally into the 50-period (4 hour) simple moving average (SMA), and trendline resistance.

Considering the recent decline, there is no reason to believe we will see anything over than the status quo, with another leg lower likely from here. As long as we remain below $1.2576, a bearish outlook remains.

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