FX levels to watch: EUR/USD, GBP/USD and USD/CAD
Dollar weakness looks set to continue, with a bullish EUR/USD and GBP/USD outlook accompanied by expectations of a bearish shift in USD/CAD.
EUR/USD uptrend likely to persist
EUR/USD looks set to continue the recovery from trendline support, with the current surge being seen this hour pointing towards another leg higher in the offing.
Even if we are just looking at a retracement of the sell-off from $1.142, further upside looks very likely given that we have only reached the 50% Fibonacci retracement thus far. As such, another move to the upside is expected, with $1.1325 the next resistance level of note. A break below $1.1277 would negate this bearish outlook.
GBP/USD expected to continue recovery
GBP/USD has managed to rebound after yesterday’s sharp sell-off in the wake of UK Prime Minister Theresa May’s second failed meaningful vote.
Things are likely to be more positive from here for the pound, with a likely rejection of the possibility of a no-deal Brexit tonight. The EU has the potential to throw a spanner in the works should they fail to allow for an extension or attach a very short timeline to it. However, the base case remains bullish for the pound, and with the pair rising through the $1.3149 peak from last week, it looks likely we have bottomed out for the pair. A break below $1.305 would bring raise questions over this recovery.
USD/CAD looks set for another leg lower
The bearish dollar sentiment is also relevant in the USD/CAD pair, with the price looking set for another leg lower from here.
The substantial gains seen throughout last week is now being retraced, and the shallow rally overnight points towards a break lower before long. As such, selling at the break below $1.335 looks like an attractive opportunity, with further short-term downside looking likely from here.
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