EUR/USD and GBP/USD breaking lower, while USD/CAD reverses upward
EUR/USD and GBP/USD head lower after recent volatility, while USD/CAD seems to have bottomed out for the time being.
EUR/USD volatility resolves to the downside
EUR/USD saw significant volatility yesterday, as the European Central Bank (ECB) attempted to make up for their lack of action by providing clues on a potential impending quantitative easing (QE) program. That volatility took price fleetingly into the $1.1107 low from May, only to be followed up by a spike higher.
We are seeing the pair move lower here, and the key is whether we can see price break below trendline support to find a new two-year low. Ultimately, we are trading around a multi-year trendline, and thus there is a strong chance that the pair will turn higher before long. As such, short-term downside would need to be substantial in size to bring confidence that we are not about to see a rebound for the pair. Watch out for the upcoming US gross domestic product (GDP) figures for quarter two (Q2), with a weak figure bringing a heightened chance that this pair starts to rebound from here.
GBP/USD heads lower after recent rebound
GBP/USD looks like it’s getting back on the bearish pathway, as markets wake up to the fact that the EU and the UK Prime Minister Boris Johnson’s Brexit stance are likely to be incompatible. The possibility of a no-deal Brexit in October is very real and appears to be gathering pace every day.
The charts highlight the continued creation of lower highs, while a break below $1.2418 would bring expectations of another leg lower from here. That breakdown seems likely before long, but it makes sense watching for a move below $1.2418 to provide confirmation. A break through $1.2522 would weaken this bearish outlook.
USD/CAD on the rise after bottoming pattern
USD/CAD has managed to break higher, following a bottoming pattern that has seen the creation of lower highs and lows reverse in higher highs and lows.
We are seeing the pair push upwards this morning, following a shallow retracement. That looks to provide us with a buying opportunity, with further upside looking likely over the short term. A break below $1.3115 would negate this bullish view.
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