Last week was relatively quiet, and that may continue as summer doldrums could weigh in the absence of more market-moving headlines. With that said, though, there will still be some set-ups worthy of our attention. The Euro could continue on a bit higher before finding opposition. GBPUSD is stuck in the mud at support. USDCAD momentum turned sharply, there is a technical development to watch as we head into next week.
Technical Highlights:
- US Dollar Index (DXY) sitting on trend-line support
- EURUSD stalling, but may have another leg in it
- GBPUSD sitting on long-term support zone
- USDCAD turn has trend-line in focus
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US Dollar Index (DXY) sitting on trend-line support
The US Dollar Index (DXY) is teetering on a trend-line from June that is still giving it support but if it doesn’t start gathering some upside momentum soon it will be at risk of dropping next week. The Euro which is trying to negate a few bearish reversal days will be the decider of this as it accounts for ~57% of the index.
DXY Daily Chart (sitting on June trend-line)
EURUSD stalling, but may have another leg in it
The Euro posted a few minor reversal bars but those are failing to lead to anything meaningful on the downside and if they don’t soon then probability increased that it will trade higher. If that is the case then the 11300/50-area will be in focus as a spot of interest for sellers to show up.
EURUSD Daily Chart (stalling but watch resistance above on further strength)
GBPUSD sitting on long-term support zone
Cable has been extremely weak despite other currencies bouncing against the Dollar. Today, that weakness continues, but a bounce could develop at any juncture soon with long-term support down to 11905 (Oct ’16 flash-crash low). Watch for a strong reaction to potentially change the course of things.
GBPUSD Daily Chart (dead in water in long-term support zone)
USDCAD turn has trend-line in focus
USDCAD was swatted lower from around resistance starting the second half of Wednesday through yesterday. Today we are seeing it bounce a bit, but keep an eye on a break of the lower parallel of a developing channel off the July low. The overlapping price action in the channel suggests another lurch lower could be nearing. But first a break needs to develop.
USDCAD Daily Chart (dead in water in long-term support zone)
USDCAD 4-hr Chart (watch for lower parallel break)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
