EUR/USD, GBP/USD and USD/CAD show signs of reversing

The dollar is coming back into favour, with rate cuts now largely priced in. Will that spark reversals for EUR/USD, GBP/USD and USD/CAD?

​EUR/USD giving up gains, as it heads into trendline support

EUR/USD gains are starting to erode, with yesterday's declines looking likely to be followed up by yet another move lower today. The rise into 76.4% Fibonacci resistance ($1.1366) points towards a potential move lower from here, with the bearish engulfing pattern adding to that bearish view.

Trendline support is going to be key here, with a break below this ascending trendline and the $1.1275 level bringing a wider bearish picture into play. Ultimately, this appears to be a case of markets looking beyond the widely expected Federal Reserve (Fed) rate cut, to instead note the significant economic impact that appears inevitable in the eurozone. With the dollar expected to resume its role as a haven once this easing phase is over, there is reason to believe that the dollar will come back into favour before long. That could begin today, with a break below $1.1275 required to provide greater confidence of a move lower from here.

GBP/USD rate cut declines fail to hold

GBP/USD saw a sharp move lower this morning, after the Bank of England (BoE) imposed a 50 basis-point rate cut. This was largely expected to come at some point, with the failure to hold those losses highlighting that fact.

The four-hour chart highlights how this recent pullback has respected the 76.4% Fibonacci retracement and could push higher. Given the lessened impact of the virus in the UK compared with mainland Europe, there is still a case for sterling strength. Thus, watch for a potential rise from here as we build on the decline into Fibonacci support. A break back below today's low would point towards further downside coming into play.

USD/CAD easing back from major resistance level

The decline in crude prices have sparked a bout of buying for USD/CAD, sending the pair into the $1.3794 resistance level (2017 high). With the price gradually moving lower, the Canadian dollar is trading in much the same manner as Brent.

With that in mind, it is likely that another breakdown for crude could lead USD/CAD back into the $1.3794 resistance level. A break above there would signal a likely push onwards and upwards for this pair. With that in mind, there is a chance we are retracing as a precursor to further upside. However, it makes sense to await a break through either $1.3609 or $1.3796 to bring a directional signal for this pair.

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