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.
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 an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
- Forex
- Shares
- Indices
