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

Could the dollar be coming back into strength? Tentative signs of GBP/USD weakness and USD/CAD strength point towards this possibility.

Dollar and Canadian dollar
Source: Bloomberg

EUR/USD continues its ascent

EUR/USD remains on a very clear short-term uptrend, with higher highs and higher lows in play all week. The 50-hour simple moving average (SMA) has been providing reliable support of late, with a pullback to that area looking like a good buying opportunity.

In any case, a bullish outlook remains in play unless we post an hourly close below $1.1830.

GBP/USD could rebound following sharp sell-off

GBP/USD sold off sharply in the wake of yesterday’s Bank of England (BoE) meeting, with the price falling into trendline support. We are seeing some strength coming back into play here, with a rebound looking likely. However, there is reason to believe it is the beginning of a bearish reversal for the pair.

As such, it makes sense to look out for the Fibonacci retracements are possible areas to sell into. A break back above $1.3268 would negate that bearish view. 

Potential USD/CAD head and shoulders

USD/CAD is approaching the $1.2552 mark, which represents the lower bounds of a head and shoulders formation. This pair has been showing signs of a potential bullish move over the past week, with the break above $1.2576 completing a double bottom formation.

For now, the ability to break below the $1.2539-$1.2552 support zone is key to understanding whether we are going to see a deep retracement towards the $1.2495-$1.2466 region. 

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