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

The big speech from the prime minister will dominate attention in sterling crosses, but comments from Donald Trump have resulted in further weakness for the dollar.

Pound coin and US dollar note
Source: Bloomberg

GBP/USD prepped for volatility

All eyes are on the prime minister as she prepares to issue her speech at 11.45am today (GMT). We saw a significant bounce from the lows seen at the beginning of the session on Monday, with the $1.20 level holding as support.

It is likely to be a volatile session, so the price should be treated with care. A break through $1.2150 would target $1.22 and then $1.2329, while a sudden turn south back towards $1.20 would need to break this level to open the way to $1.19 and then $1.1772.

EUR/USD fuelled by Trump’s comments

The rally here has been given a further lease of life thanks to comments from the president-elect, who has said the US dollar is ‘too strong’. What he can do about this is unclear, but the market has taken the opportunity to push currencies such as the euro higher.

The next major area to watch for resistance is $1.0714, and then on to $1.0733. Meanwhile the $1.0576 area could provide support, and with dips being assiduously bought it will take a move below $1.0550 to suggest the surge here has run its course.

USD/CAD drops on back of president-elect’s comments

Signs of stabilisation have given way to a further drop, thanks to the comments from Mr Trump. The next major area to watch for support is the low of 12 January at C$1.3029, with a break below here opening the way to C$1.2998 and then C$1.2881.

A weakening US dollar is likely to boost oil prices, which should help fuel further downside in this pair. The price needs to post a daily close above C$1.3150 to reverse the bearish outlook. 

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