FX snapshot – GBP/USD, USD/CAD, NZD/USD, AUD/NZD

RBNZ rate cut sends NDZ lower, yet signs show that a possible recovery is in view.

New Zealand dollars
Source: Bloomberg

GBP/USD pulls back to key support level

The GBP/USD bounce seen earlier this week, from the 1 June low at $1.517, closed above the crucial $1.533 level which represents the July low and double-top neckline. Early signs point towards possible support being respected around this level, and there is a possibility that the price could use this as a base to push higher once more.

Coming off the back of a bearish trend which has seen new lows and lower highs, I would want to see a move above $1.5416 for a new high or a new higher low above $1.517 to gain confidence that we are moving into a more bullish phase. However, for now I am watching for a possible bounce from $1.533, where a close below that level on intraday charts could point to another strong move lower today.

USD/CAD falling back from triangle top

USD/CAD is pulling back from the upper end of a symmetrical triangle formation that has been in play for over two weeks now. Typically the selloff has been more consistent than the buying within this pattern, and thus I could see further softness bringing us back towards the $1.3182 area. Support levels to watch for a possible short-term bounce are $1.3214, $1.3198 and $1.3182.

NZD/USD spiking higher from consolidation

NZD/USD is spiking higher this morning, following a major selloff overnight after the RBNZ cut rates. The consolidation around $0.6256 and $0.6287 took place above the $0.6244 low, which is a fairly bullish sign, especially given that yesterday’s spike broke above $0.6416. As such, I expect to see a strong move higher today, back towards the initial $0.6333 resistance level and then possibly even back towards $0.6426.

AUD/NZD approaching top end of triangle formation

The spike higher in AUD/NZD today is bringing us back within close proximity of the descending trendline, which represents the top end of a symmetrical triangle seen over recent months. This trendline has provided some strong selloffs in the past, and I expect to see another one in the coming days. However the difficulty of this is that we have seen the chart turn on a dime, with little substantial reversal signals.

One fairly reliable pattern we have seen mark the tops is a bearish engulfing. Thus, while I do expect further upside today, should the price reach the trendline (currently NZD$1.123), I will be watching for a bearish engulfing pattern to look for a move lower.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.