Today’s key points
Having achieved our advocated target of 0.7750, EUR/GBP has been undergoing a pause. The pair has sustained above the confirmation level of the double bottom and inverted H&S at 0.75/0.7450 which remains an important support. Recently, the pair has rebounded after testing a multi month trend support (currently at 0.76) and is now closing in on January highs of 0.7750. It is noteworthy that it has completed a typical 3-year down cycle earlier and further recovery looks on cards however a break beyond 0.7750 will be needed to signal a larger pullback towards September 2014 highs of 0.8070/0.81.
After testing intermittent resistance at 100/100.40, the Dollar Index is undergoing a short term pullback. Very short term, it has tested the triangle limit at 96/95.60 and is now approaching towards immediate resistance at 97.45. A move below 96/95.60 will mean a test of 94.40, the 76.4% retracement of recovery since last August. Please refer to the Chart Alert published last week about an alternative view on the index.
USD/CAD probed the multiyear ascending channel support last week at 1.3760/1.37, where it has formed a daily hammer and bullish engulfing. With daily stochastic indicator near a trend support, a recovery looks possible. A break above 1.3910, a steeper descending trend will lead to a pullback initially towards 1.4170 and even towards 1.4290/1.4330, the 61.8% retracement from January highs.