USDCAD: Watch for a breakout above 1.313

EURUSD (1.107): EURUSD has been bouncing off the 1.105 – 1.10285 support level for nearly 11 days so far with nothing to show for. The minor resistance seen at 1.1124 is likely to keep price action remain in a consolidation, but a breakout off this level could see near-term strength in prices. To the upside, EURUSD is seen testing 1.123 – 1.1214 resistance level marking a retest of the head and shoulders pattern, while to the downside, a breakout below 1.10285 could trigger further declines to 1.0810 – 1.0750. We continue to maintain the view for the EURUSD downside, potentially from 1.123 – 1.121 levels.

USDJPY (103.06): USDJPY has formed a bullish divergence near the lows of 100.53 and in the process broke above the 101.5 level of minor resistance. A continuation to the upside is likely to see USDJPY potentially test 106 – 105.5 levels of resistance. A dip back to 101.54 could potentially confirm the bullish view to the upside. However, we expect to see USDJPY turn range-bound over the near term, with price action likely to stay flat within 105/106 and 101/102 levels, unless the price action is backed up by strong fundamentals.

GBPUSD (1.307): GBPUSD has been trending lower after falling below 1.322 support. Price action is currently seen forming a base and a daily close above 1.312 could see near-term strength in the British pound. The unfilled gap from June 24 at 1.3677 remains a key level of interest above 1.322. The fundamentals that could likely support the upside view is this Thursday’s Bank of England’s interest rate decision, where the markets currently price in a 25bps rate cut. Failure to act at July’s meeting could see the sterling post some strong gains while also putting a squeeze on the weaker shorts at the current levels.

USDCAD (1.311): USDCAD is starting to show initial signs of a potential breakout from the 1.313 – 1.252 level it has established. USDCAD has been trading in this price zone since early March, and a breakout above 1.313 could signal further upside with gains seen extending to 1.3696 – 1.375 region. The bullish ascending triangle is seen on the chart further adds to this view.

USDCHF (0.9833): USDCHF has been consolidating around 0.9774 level for the past few days and with no follow through on the still evolving head and shoulders pattern, there is a scope that USDCHF could be looking to break higher. Support is seen at 0.9774 followed by the next resistance level of 0.9928 and eventually 1.0150. To the downside, a breakout below 0.9774 and the lower median line will quickly shift focus back to the prevailing H&S pattern in which case an initial test to lower support at 0.954 can be expected.