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

The dollar reversal seems to be coming to fruition, with EUR/USD and GBP/USD both turning lower, while the USD/CAD continues its recent ascent. 

Canadian dollar
Source: Bloomberg

EUR/USD breaks out of uptrend

Friday saw EUR/USD drop through trendline support, threatening the uptrend in play over recent months. Crucially, we saw the price follow up that break with a move below the hugely notable $1.1785 swing low. This gives us confidence that we are seeing a reversal, with shorts preferred on the rebound.

With that in mind, it is worth using the Fibonacci retracements as areas of value. Of particular note would be shorts around the $1.1860 region. We would need a break back up through $1.1910 to negate this new bearish outlook.

GBP/USD expected to fall further

GBP/USD saw weakness from both Thursday’s Bank of England (BoE) meeting, and Friday’s US jobs report, which dragged the pair through the key $1.3048 support level. While we are seeing some marginal gains this morning, they seem unlikely to last, with Fibonacci retracements providing levels for potential shorts.

Alternately, another short pullback followed by a move below $1.3024 would bring a breaking signal, utilising the shallow nature of the pullback as a means to provide a smaller stop loss, and stronger risk-to-reward profiles. For now, we would need to break back above $1.3164 to negate this bearish view.

USD/CAD pushes into 20-day high

USD/CAD clearly seems to have bottomed out, with the price rallying marginally through Friday’s high of $1.2667 this morning.

It looks like we are set up for a clear uptrend from here on, and as such a bullish view remain in place unless we break below $1.2630. Keep an eye out for oil prices, which have a chance of rolling over following recent gains. That should provide further emphasis to this potential rally.  

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.