OPEC’s decision to cut output has been felt in FX markets, with USD/CAD in full retreat. Elsewhere, it looks like both cable and dollar-yen may be in for a move higher.
GBP/USD dips may be an opportunity to buyThe pair has spent the past two weeks building a base above $1.2950, and now it has succeeded in pushing back above $1.30. We would look to see a further move higher, in the direction of the 50-day simple moving average (SMA) at $1.3135, with some initial resistance at yesterday’s highs at $1.3058. It would need a move below $1.2950 to indicate weakness is ahead, so any dip that holds above this level could be treated as a fresh buying opportunity.
EUR/USD buyers to grapple with descending trendlineThe floor here all week has been $1.1190. Now we look to see how the buyers deal with the descending trendline that came into play earlier this week.
To break it, we will need a daily close firmly above $1.1276, otherwise the risk is we turn lower and head back to $1.1190 and then the rising trendline from last December, around $1.10.
USD/JPY clings on above ¥100The pair refused to move below ¥100 over the past week, and with a move back to the 50-day SMA (¥101.95) now in prospect we would look to buy intraday dips.
The hourly stochastic is now heavily overbought, which suggests a less attractive balance of risk vs reward. Instead, a move for this indicator back to oversold would provide a potentially more attractive opening.
It would take a daily close below ¥100 to negate the current attractive outlook for the pair.
USD/CAD remains oversoldThe OPEC deal overnight caused a handbrake turn here, with the pair once again turned back from the 200-day SMA (C$1.3231).
Continued Loonie strength here could see the pair push below the 50-day SMA (C$1.3052). It is still relatively oversold intraday, so a move back towards C$1.3130 could provide a more attractive entry.
