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

Sterling pairs could see increased volatility today ahead of the Supreme Court ruling, while the Aussie could be at the end of its remarkable run against the US dollar.

Euro coin and sterling note
Source: Bloomberg

EUR/GBP continues to head lower

The pair hit its lowest level since 6 January yesterday, exploring the area below the £0.86 level and creating a new lower low. The direction of travel since last week has been firmly lower, so rallies should continue to be sold, unless the Brexit court news provides a serious disruption.

Given the market is still broadly short sterling this seems unlikely. Instead we look to downside targets at £0.8565 and £0.8534. 

AUD/USD rally looks like it may be at an end

The pair’s remarkable rally from the December lows may at last be under threat. The price has hit the inside trendline that goes all the way back into early 2011, and held back progress throughout most of 2016.

A failure to move above $0.76 would indicate the bounce has run its course, and we would look to see if the price can create a new lower low, with a break below $0.75 likely giving a firm indication that more losses are in store.

USD/CAD falters at 50-day SMA

The price underwent a sharp reversal last week, but faltered at the 50-day simple moving average (C$1.3340). A pullback yesterday encountered support at C$1.3215, and now we look to see if the price can move back above $1.33 and C$1.3350.

A failure to hold C$1.32 would indicate the sellers are back in charge, and could lead to a move back towards C$1.3090 and lower. 

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