Overview
The article discusses the current state of the foreign exchange market, particularly focusing on the USD/CAD and GBP/CAD currency pairs, and their implications for a potential rebound in GBP/USD. With the US inflation figures set to be released, the market is on edge, especially given the recent rise in crude oil prices and the US dollar's rally due to hawkish Federal Reserve expectations.
USD/CAD Technical Analysis
The USD/CAD pair has shown signs of exhaustion after a strong rally from September lows to recent highs. The article notes that the pair has been trading within a volatile range and highlights a bearish engulfing candle that suggests a potential retracement. Key support levels are identified around the 1.4500 mark, which could be a target for bears if the anticipated retracement occurs.
GBP/CAD Technical Analysis
In contrast, GBP/CAD maintains a bullish structure despite some messy price action. The article points out that the pair recently found support around the 50-week EMA and has broken higher from a bearish corrective channel. The author is looking for signs of a swing low to confirm bullish momentum, with potential targets set at 1.8966 and the psychological level of 1.9000.
GBP/USD Technical Analysis
The analysis suggests that if the anticipated pullback in USD/CAD and rebound in GBP/CAD materialize, GBP/USD could also see a bounce. The pair has formed two rickshaw dojis on the weekly chart near the 1.3200 support level, indicating a potential bullish reversal. The article emphasizes that a bullish engulfing candle could serve as a trigger for this rebound, particularly if the upcoming US CPI report leads to a dollar pullback.
Conclusion
The article concludes that the interplay between USD/CAD and GBP/CAD provides valuable insights into the potential movements of GBP/USD. Traders are advised to monitor the upcoming US CPI data closely, as it could significantly influence the dollar's strength and, consequently, the performance of these currency pairs.