Dollar weakens ahead of US CPI, driving EUR/USD and GBP/USD higher and weighing on USD/CAD
Nervousness ahead of today’s US CPI reading has weakened the dollar, continuing the recent theme of strength in EUR/USD and GBP/USD and weakness in USD/CAD.
EUR/USD bounce continues
EUR/USD has enjoyed a healthy bounce from the 50-day simple moving average (SMA), and sits at the highs seen in June.
The breakout from trendline resistance from the June high has put the buyers back in charge, and now a move back to $1.11 seems to be in the offing. Above this the price will create a new higher high, reinforcing the uptrend.
A reversal back below $1.085 would be needed to negate the near-term bullish outlook, and could then see the price head back to the $1.07 level.
GBP/USD looking strong on expectations of more rate hikes
Tuesday’s employment and wage data prompted GBP/USD to surge to its highest level since April 2022.
Expectations of more Bank of England (BoE) rate hikes has driven the pair higher, and over the past week the price has rallied to a fresh higher high. This leaves the uptrend firmly intact and puts the price on course to target $1.30.
Sellers have been shut out since late June, and a reversal back below $1.26 would be needed to suggest some short-term weakness.
USD/CAD falls to C$1.32
A sharp reversal here with USD/CAD has reignited the downtrend, with further losses looking likely.
The rally to the 50-day SMA ended with a sharp drop on Friday, and additional losses since then have put the sellers firmly in charge. A move back to C$1.314, and could see further losses towards lows not seen since August last year.
A move above C$1.338 would be needed to reverse the bearish view.
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