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

Further downside is expected for EUR/USD and GBP/USD, whereas USD/CAD longs are likely to come into question around a current area of resistance.

Euro and dollar notes
Source: Bloomberg

EUR/USD in downtrend since May
EUR/USD has been consolidating since Friday evening, following on from a sharp deterioration to close out last week. We are clearly in a downtrend since the May peak and this short-term view aligns with the medium-term picture.

We have seen the $1.0979 level hold up as resistance so far and thus any further upside would be looking towards this as the initial level to break for a deeper retracement.

Ultimately, a bearish view is in place unless we see an hourly close above the previous swing high, which on this occasion is $1.1041. Support levels of note are $1.0952 and $1.0911.

Bearish view remains on GBP/USD
IN_GBPUSD has failed to really follow through on the head and shoulders pattern completed last week. However, with a subsequent rally coming into the 76.4% retracement on two occasions the bearish view remains intact.

This morning has seen a short-term bounce, yet this is unlikely to really follow through to an extent that it would negate our bearish view. For that to occur, we would need to see an hourly close back above $1.3289.

Until then, watch out for bearish reversal signs on an intraday basis, with a move back down to $1.3079, $1.3064 and $1.3047 support levels expected in the near future.

USD/CAD at potential reversal point
USD/CAD is currently trading within a big area of resistance, with the pair reaching the top end of a wedge pattern. Crucially we saw price touch and reject the May high of $1.3188 level and this is going to be key for the day’s trading.

Clearly we are at a potential reversal point for this market and, as such, a breakout or market top could form. Crucially, we would need an hourly close below $1.3121 to provide a bearish view. Alternately, an hourly close above $1.3188 would provide a strong chance of a bullish breakout scenario.

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