FX snapshot – GBP/USD, EUR/USD, USD/CAD, AUD/USD

Euro weakness and US dollar uncertainty continue to drive markets, while the pound is fighting to hold gains after comments at the weekend from Mark Carney.

A clerk counting euro and US dollar notes
Source: Bloomberg

GBP/USD heads towards trendline

A swift breakout and pullback from the trading range we saw last week saw cable push rapidly lower, but salvation for buyers may be appearing in the form of the rising October trendline. Support may well be found in the area around $1.53, at which point we may see whether the pair can push back on to the $1.5385 area. Admittedly the sterling bears will be going into the week in an enthusiastic frame of mind given Mark Carney’s comments about rate rises in the UK being now just a ‘possibility’.

A drop through the October hourly trendline would suggest that GBP/USD is heading back towards $1.52, the low of 13 October, with further support available around $1.5150 and then $1.5105.

EUR/USD aims to hold $1.10

If Mario Draghi was after a weaker euro, he certainly got that last week. The selling continued on Friday, but for the time being the pair has bounced off the $1.10 level. The $1.1080 mark is the immediate area to watch for, with the 50-hour SMA at $1.1124 just above that, and then the $1.1172 area beyond it. A daily close back below $1.10 would suggest that we are in for a move back towards $1.0910, with the July lows around $1.08 acting as a longer-term downside target. 

AUD/USD moves higher once again

It proved tough for Aussie bulls to push the currency up last week, but the pair seems to have borrowed some of the strength of will shown by the national rugby team, pushing AUD/USD back upwards once more.

The $0.72 level remains key support, as it did earlier in the month, and with the RSI now firmly rising on a daily timeframe we may well see a move back towards the 100-day SMA at $0.7324. First the pair needs to push above Friday’s highs around $0.7281, but a close through here would give it the momentum to challenge the October highs again.

A move back through $0.72 would radically change the outlook, and while there is some support at $0.7167, the risk is of a quick and dramatic move down towards $0.70, giving back many of the gains of October.

USD/CAD continues to rise

So far dips in the trend seen over the past two weeks have been met with renewed buying, so we will be watching to see if this continues. Although the pair has retreated from Friday’s highs, it continues to look strong, with support likely to enter the frame around C$1.31. A bounce from here would target C$1.32, with a close above here putting the price above the 50-day SMA once again and heading back towards the year’s high at C$1.34. 

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