Dollar strength is likely to shine through once more, yet fundamental news has the potential of altering the state of play for GBP/USD and USD/CAD.

Pound dollar
Source: Bloomberg

GBP/USD sets tone for bullish phase

Yesterday saw GBP/USD break above an ascending trendline from April and with it created a new high, punching above the 6 July peak of $1.563. Ultimately, these two moves point to a clear uptrend in play and thus the price action seen last week has been confirmed as a bottom.

Despite the likeliness of some form of pullback in the near-term, I am bullish and would expect to see a move back towards $1.593 by the end of next week. Any retracement lower would give good buying opportunities, with the main support levels I am watching coming at the ascending trendline (currently $1.5636), $1.559 and $1.5552.

Be aware that the UK jobs report will being released today and thus there is a chance of major fundamentally-driven price action.

USD/JPY breaks out of wedge to bring bullish outlook

Despite the break lower last week, USD/JPY has recovered and moved out of the top end of the June falling wedge pattern. Yesterday saw a temporary move lower, which sought to find new support at that previous resistance trendline. Despite it not fully managing to hit the trendline, I still see this as a sufficient move and expect further bullish price action to follow soon.

The ¥123.73 resistance point is absolutely crucial here as a move above this level would bring a new high to negate the 8 July lower low. As such, I am waiting for a break above ¥123.73, which if it occurs would provide a bullish outlook for a move towards the ¥124.38 and ¥125.86 resistance. 

NZD/USD expected to fall in today’s session

NZD/USD has been slowly moving lower following the shift higher that occurred last week. The long-term downtrend remains within place and as such, I would expect to see us resolve this current phase with a continuation of this. However, for the time being, we have both a major support ($0.6663) and descending channel (currently $0.6650) in view.

What I can say in confidence is that we are very likely to move to at least the $0.6663 level today and then the reaction to one or both of these levels.

Thus I am bearish for the current session, with a move back to those support levels at which point we will judge again given its response to support.

USD/CAD flirts with a breakout for another leg higher

USD/CAD has been consolidating in the past week following a strong uptrend throughout mid-June to mid-July. For that reason, the most likely end to this period of consolidation is towards the upside. Yesterday’s temporary break above C$1.2772 points towards a willingness to do just that.

Overnight we have seen price hold up upon the 20-period SMA, which has been a crucial support indicator earlier in July. Thus I am bullish while price is above this SMA and do expect us to break to a new high today. Be aware that the C$1.2756 resistance level is in sight, which represents the March peak and six-year high.

I am bullish, yet am mindful that we could see some selling and profit taking at C$1.2752. Be aware that the Bank of Canada will be announcing its latest monetary policy decision today and thus there is a chance of major fundamentally-driven price action.

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