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

The dollar reversal seems to be coming to fruition, with EUR/USD and GBP/USD both turning lower, while the USD/CAD continues its recent ascent. 

Canadian dollar
Source: Bloomberg

EUR/USD breaks out of uptrend

Friday saw EUR/USD drop through trendline support, threatening the uptrend in play over recent months. Crucially, we saw the price follow up that break with a move below the hugely notable $1.1785 swing low. This gives us confidence that we are seeing a reversal, with shorts preferred on the rebound.

With that in mind, it is worth using the Fibonacci retracements as areas of value. Of particular note would be shorts around the $1.1860 region. We would need a break back up through $1.1910 to negate this new bearish outlook.

GBP/USD expected to fall further

GBP/USD saw weakness from both Thursday’s Bank of England (BoE) meeting, and Friday’s US jobs report, which dragged the pair through the key $1.3048 support level. While we are seeing some marginal gains this morning, they seem unlikely to last, with Fibonacci retracements providing levels for potential shorts.

Alternately, another short pullback followed by a move below $1.3024 would bring a breaking signal, utilising the shallow nature of the pullback as a means to provide a smaller stop loss, and stronger risk-to-reward profiles. For now, we would need to break back above $1.3164 to negate this bearish view.

USD/CAD pushes into 20-day high

USD/CAD clearly seems to have bottomed out, with the price rallying marginally through Friday’s high of $1.2667 this morning.

It looks like we are set up for a clear uptrend from here on, and as such a bullish view remain in place unless we break below $1.2630. Keep an eye out for oil prices, which have a chance of rolling over following recent gains. That should provide further emphasis to this potential rally.  

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