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

RBNZ rate cut sends NDZ lower, yet signs show that a possible recovery is in view.

New Zealand dollars
Source: Bloomberg

GBP/USD pulls back to key support level

The GBP/USD bounce seen earlier this week, from the 1 June low at $1.517, closed above the crucial $1.533 level which represents the July low and double-top neckline. Early signs point towards possible support being respected around this level, and there is a possibility that the price could use this as a base to push higher once more.

Coming off the back of a bearish trend which has seen new lows and lower highs, I would want to see a move above $1.5416 for a new high or a new higher low above $1.517 to gain confidence that we are moving into a more bullish phase. However, for now I am watching for a possible bounce from $1.533, where a close below that level on intraday charts could point to another strong move lower today.

USD/CAD falling back from triangle top

USD/CAD is pulling back from the upper end of a symmetrical triangle formation that has been in play for over two weeks now. Typically the selloff has been more consistent than the buying within this pattern, and thus I could see further softness bringing us back towards the $1.3182 area. Support levels to watch for a possible short-term bounce are $1.3214, $1.3198 and $1.3182.

NZD/USD spiking higher from consolidation

NZD/USD is spiking higher this morning, following a major selloff overnight after the RBNZ cut rates. The consolidation around $0.6256 and $0.6287 took place above the $0.6244 low, which is a fairly bullish sign, especially given that yesterday’s spike broke above $0.6416. As such, I expect to see a strong move higher today, back towards the initial $0.6333 resistance level and then possibly even back towards $0.6426.

AUD/NZD approaching top end of triangle formation

The spike higher in AUD/NZD today is bringing us back within close proximity of the descending trendline, which represents the top end of a symmetrical triangle seen over recent months. This trendline has provided some strong selloffs in the past, and I expect to see another one in the coming days. However the difficulty of this is that we have seen the chart turn on a dime, with little substantial reversal signals.

One fairly reliable pattern we have seen mark the tops is a bearish engulfing. Thus, while I do expect further upside today, should the price reach the trendline (currently NZD$1.123), I will be watching for a bearish engulfing pattern to look for a move lower.

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