FX levels to watch: EUR/USD, GBP/USD and USD/CAD
The dollar has been under pressure, with EUR/USD and GBP/USD on the rebound. However, with a sharp decline at the turn of the year, is this a precursor to a bullish surge in the dollar?
EUR/USD pushing higher after recent decline
EUR/USD has been falling back over the turn of the year, with the price dropping below the key $1.1305 level. To some extent, that fall into a new lower low could signal the start of a more bearish phase coming into play.
However, with the price having dropped back towards the ascending trendline, it is clear that the wider upward trend could remain in play. As such, there is not a clear-cut bullish or bearish pattern in play here, with arguments for both. As such, watch for a break through $1.1500 to confirm the bullish theme. Otherwise, a bearish turn before that $1.1500 level would start providing signals of a possible next leg lower.
GBP/USD rally looks likely to fall short
GBP/USD has been gaining ground since the drop below $1.2477, with the pair now starting to stall.
That drop into a new low on 2 December highlights a continuation of the wider bearish theme, with the current rally looking likely to falter rather than create a new higher high. As such, watch for a potential bearish shift from here, with a rally above $1.2812 required to negate the wider downtrend.
USD/CAD drops into trendline support
USD/CAD has been on the decline throughout the start of the new year, with the price falling into and below the lower boundary of the ascending channel pattern.
This raises the chances of a wider downturn for the pair, yet with the price currently challenging an ascending trendline, there is a good chance we will see a rebound soon. Thus, it makes sense to watch for a potential rebound from here, with a drop below trendline support providing a bearish continuation signal for the short term.
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