FX levels to watch: EUR/USD, GBP/USD and USD/CAD
Dollar strength looks likely, with EUR/USD and GBP/USD expected to turn lower. Meanwhile, USD/CAD is likely to rise over the near term, yet the wider bearish trend is likely to kick in once again before long.
EUR/USD expected to turn lower to end the week
EUR/USD has been slowly grinding higher overnight, set within a recent downtrend. That trend is expected to continue unless we see the price break through the $1.1406 peak from yesterday.
Should that occur, it would begin to build a more bullish picture. However, with the price consolidating around the 76.4% retracement, this pair is providing a strong risk-to-reward profile for short positions over the short term.
GBP/USD turning lower from Fibonacci resistance
GBP/USD has been gaining throughout the past two weeks, with Brexit fears being largely disregarded for sterling bulls. However, until we see a break through the $1.3175 level, the wider downtrend remains intact.
With the price having rallied into the 76.4% retracement of that wider trend, the respect we have seen play out yesterday highlights a possibility that the long-term downtrend will come back into play once more. As such, further downside looks likely for the near term, with a break below each successive swing low helping build the bearish picture. Conversely, a rally above the 76.4% resistance level of around $1.30 would dent expectations of a bearish shift in this pair.
USD/CAD wedge points to future breakdown
USD/CAD continues to regain ground following a sharp deterioration at the turn of the year. This downtrend is clearly defined, yet we have been seeing signs that the pair will begin to strengthen in a bid to retrace some of that downside.
However, with a rising wedge forming for USD/CAD, it looks likely that the pair will break down once again before long. As such, while short-term gains look likely, watch for a drop below the latest swing low of $1.3226 as a signal that the bearish trend is going to come back into play.
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