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

Dollar weakness is the theme at present, although today’s Federal Reserve meeting could provide some interesting volatility. 

Pound and dollar
Source: Bloomberg

GBP/USD eyes $1.2865

Weakness in cable yesterday was swiftly reversed, with the price back above $1.25 and now looking set to challenge the highs of late January around $1.2650.

From here the next target would be $1.2865 and then $1.3125. Yesterday’s bounce confirms the price action from 24 January, namely that $1.24 is a key support area and that a bigger downward move will need a drop through this level.

AUD/USD looks to $0.78

A steady recovery from the $0.75 area has meant that bears have been disappointed, so now we look to see whether the $0.76 area can be broken for the pair. If so then the way is clear to $0.77 and potentially to $0.78.

A breakdown from here would suggest the inside trendline that has been in place since mid-2013 has reasserted itself and we would see a drop to $0.75 and then to $0.74.

USD/CAD could target 200-day SMA

C$1.30 continues to hold, as it has done since mid-January. This provides a good base to work against, although upside momentum has been lacking of late.

The price appears to be running out of upside momentum, so we could see another test of C$1.30.

A break below here could be a trapdoor moment to C$1.29 or C$1.27 for USD/CAD. Any upside move targets the 200-day simple moving average (SMA) at C$1.3127 and then C$1.3180.

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