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

The dollar is in charge this week, with EUR/USD and GBP/USD falling amid gains for the USD/CAD pair. However, with the release of jobs data this afternoon, what levels should we watch?

Canada dollar
Source: Bloomberg

EUR/USD breaks into new low

EUR/USD managed to break lower once more overnight, with a fall below the $1.1696 level providing a continuation signal of the recent downtrend. With that in mind, further downside is likely. However, with trendline support in view, it makes sense to await a potential retracement of yesterday’s drop before looking for shorts once more.

With the pair trading in a falling wedge, there is a good chance that the eventual breakout will come towards the upside. However, for that to come into play we would need to see a break up through $1.1788.

GBP/USD descent continues apace

GBP/USD has dropped sharply over the past week, with the support level of $1.3154 being broken to provide a wider bearish outlook. This points towards further downside over the medium term. However, for now this market is in a tricky place for traders. New positions would have to contend with the potential of a retracement of the fall from the last swing high of $1.3292.

As such, the best bet for shorts is to wait for a continuation pattern and utilise that to obtain a closer stop. As such, while further downside seems likely, it makes sense to await a pullback or continuation pattern to place positions.  

USD/CAD spikes higher from trendline confluence

USD/CAD has broken higher following a pullback into a confluence of trendline and Fibonacci support. This keeps the recent uptrend alive, with the pair heading towards the crucial $1.2663 resistance level. Given the rather extended nature of this move, we could start to retrace again before long. However, unless we break below $1.2449, such a pullback would be expected to represent a buying opportunity.

With both US and Canadian jobs data released in the afternoon, volatility is expected to ramp up sharply. With that in mind, keep an eye out for the $1.263 level, which if broken, would lead to a wider bullish reversal signal. 

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