GBP/USD and Canadian Dollar Bearish Ahead of US NFP

GBP/USD struggled to break the 1.3350 resistance and moved down. On the other hand, USD/CAD jumped higher and tested the 1.3000 resistance area. Today’s NFP report could impact the market sentiment for both GBP/USD and USD/CAD.

Important Takeaways for GBP/USD and USD/CAD

  • The British Pound failed to break an important resistance at 1.3350 and declined.
  • There was a break below two bullish trend lines with support at 1.3300 on the hourly chart of GBP/USD.
  • USD/CAD climbed higher recently and tested the 1.3000 handle.
  • Today, the US nonfarm payroll release for May 2018 is forecasted to register 188K, more than the last reading of 164K.

GBP/USD Technical Analysis

After a heavy decline, the British Pound found support above the 1.3200 handle against the US Dollar. The GBP/USD pair traded as low as 1.3204 and started an upside move.

It traded above the 1.3250 and 1.3300 resistance levels to move into a bullish zone. However, the upside move was capped by a strong resistance at 1.3350. The pair failed near 1.3347 and later it started a fresh downside move.

GBP/USD Technical Analysis Chart

During the decline, it broke the 23.6% Fib retracement level of the last wave from the 1.3204 low to 1.3347 high. More importantly, there was a break below two bullish trend lines with support at 1.3300 on the hourly chart of GBP/USD.

The pair even broke the 50 hourly simple moving average and the 50% Fib retracement level of the last wave from the 1.3204 low to 1.3347 high.

These are negative signs and suggests that the pair may continue to decline in the near term towards the 1.3250 level. Below this, there are high chances of GBP/USD testing the 1.3200 handle.

On the upside, the broken support at 1.3300 and the 50 hourly SMA are seen as resistances, followed by the 1.3350 hurdle.

USD/CAD Technical Analysis

The US Dollar found support near the 1.2820 level this week against the Canadian Dollar. The USD/CAD pair jumped sharply and moved above the 1.2880 and 1.2900 resistance levels.

The upside move was strong as the pair even broke the 1.2950 resistance. It tested the 1.2990-1.3000 resistance zone where sellers took a stand. The pair topped around the 1.2991 level and it is currently correcting lower.

USD/CAD Technical Analysis Chart

It tested the 50 hourly simple moving average and the 23.6% Fib retracement level of the last wave from the 1.2818 low to 1.2991 high. However, the downside move seems to be limited by the 1.2940 support and the 50 hourly SMA.

On the upside, there is a connecting bearish trend line forming with resistance at 1.2980. A break above this followed by a clear break of 1.3000 is required for more upsides.

On the flip side, if the pair breaks the 1.2940 support, it could test the 50% Fib retracement level of the last wave from the 1.2818 low to 1.2991 high at 1.2905.

Recently in Canada, the Gross Domestic Product report for March 2018 was released by the Statistics Canada. The market was looking for a rise of 0.2% in the GDP (MoM), less than the last 0.4%.

However, the actual result was better as there was a rise in the GDP by 0.3%. The annualized reading was 1.3% in Q1 2018 (QoQ), less than the forecast of 1.8%. Therefore, the result was disappointing and it could weigh on the Canadian dollar in the short term.

Aayush Jindal

Aayush has spent over a DECADE as a financial markets contributor and observer. He specializes in market strategies and technical analysis, comes with an IT background. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets. He is a software engineer by profession, loves blogging and observing financial markets.

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