Following continued bullish momentum for many of the major currency pairs, these are now approaching key technical levels, which if breached could prove to be the tipping points for some sustained and longer term trends to develop.

Much of the recent bullish momentum for the EUR/USD and the GBP/USD has come from the sustained US dollar weakness of the last few weeks, which has seen the dollar index break below the 80 region and is now testing a significant level of potential support in the 79 region, a price region which has seen the index bounce higher in the past.

However, given the depth of this potential support, if this is breached then expect to see the dollar decline further, which in turn should provide the catalyst for the euro and the pound to break higher and away from recent consolidation phases of price action.

Following continued bullish momentum for many of the major currency pairs, these are now approaching key technical levels, which if breached could prove to be the tipping points for some sustained and longer term trends to develop.

Much of the recent bullish momentum for the EUR/USD and the GBP/USD has come from the sustained US dollar weakness of the last few weeks, which has seen the dollar index break below the 80 region and is now testing a significant level of potential support in the 79 region, a price region which has seen the index bounce higher in the past. However, given the depth of this potential support, if this is breached then expect to see the dollar decline further, which in turn should provide the catalyst for the euro and the pound to break higher and away from recent consolidation phases of price action.

Cable has already breached recent resistance in the 1.6850 region and now looks set to test the 1.7000 in due course. The monthly chart for the pair gives a clear picture of the congestion phase which was breached last week, and with clear water now ahead, expect to see further upside momentum driven by dollar weakness and solid fundamental news from the UK.

For the euro dollar it’s a similar picture with the pair now breaking out from longer term congestion, and moving into clear water above, all supported by the rising triangle price pattern. Provided the 1.4000 level is breached with strong and rising volume, then once again we can expect to see further upside momentum for the pair, provided the US dollar does indeed breach its own key level to the downside!

Editor's note:  Power Shares DB US Dollar Index Bullish Trust ETF (UUP, quote) seeks to track the price and yield performance of the Deutsche Bank Long U.S. Dollar Futures index. The Deutsche Bank Long U.S. Dollar Futures index is comprised of long futures contracts only and structure and mix of the futures contracts are designed to replicate the performance of being long the U.S. Dollar against the major currencies. The major currencies are Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Fran.

Anna Coulling is a trader with over 16 years’ experience and founder of AnnaCoulling.com