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

Countertrend moves for the likes of EUR/USD and USD/CAD bring the dollar back in favour. However, with recent trends clearly defined, could this be an opportunity to get in at a better price?

Canadian dollar and US dollar
Source: Bloomberg

EUR/USD turning lower within consolidation

EUR/USD looks set for further consolidation, with the pair turning lower this morning. Essentially, what we are looking for here is a break above $1.1684 or below $1.1625 to guide the short-term outlook.

A break below $1.1625 in particular would be notable as it is likely to be preceded by a failure to create a new high, above $1.1684. Should that occur, we would be looking at a possible retracement into the $1.1560 region. Conversely, an hourly close above $1.1684 would likely point towards a resumption of the recent uptrend.

GBP/USD attempts to break higher once more

GBP/USD has been channeling higher so far this week, with the price breaking through $1.3053 resistance. There is another resistance level above that at $1.3062 which needs to be broken to provide greater confidence that the recent weakness is over.

Watch out for potential support on the descending trendline which was clearly respected as new support yesterday. A break below $1.3014, and in particular $1.2988 would signal a likely continuation of the weakness seen at the beginning of last week.

USD/CAD rebound could provide selling opportunity

USD/CAD is beginning to move higher this morning, following a gradual move lower at the beginning of the week. The past five such bounces have seen the pair move lower from the zone between the 50 and 100-hour simple moving average (SMA).

With that in mind, we could be seeing the beginning of a move which could allow a good shorting opportunity. Given the gradual move lower recently, a 76.4% retracement seems unlikely, and thus the zone between the 50% and 61.8% retracement look interesting for shorts if it comes about. Given the clear inability to break through 100-hour SMA, it makes sense to utilise that indicator for stops. However, ultimately we would need to see a break through $1.2609 to negate the recent downtrend.

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