CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

​​EUR/USD, GBP/USD and AUD/USD gain from dollar weakness

EUR/USD, GBP/USD and AUD/USD expected to continue recent gains as the dollar comes under pressure.

​EUR/USD rallies into critical resistance level

EUR/USD has continued its uptrend this week, with the price rising back into the crucial $1.1239 resistance level today. Despite the consolidation we have seen mid-week, the inability to break below $1.1096 ensured that we did not see a bearish signal for the pair.

With the price currently back at the peak from 31 December, a break through here would negate a multi-year downtrend for the pair. Much of this will come down to monetary policy shifts, with the European Central Bank (ECB) unable to make any notable adjustments compared with the significant amount of Federal Reserve (Fed) easing that is likely as we move through this health crisis. With that in mind, further upside does look likely, yet it makes sense to await a break through $1.1239 to bring about greater confidence that we will continue from here. As such, the reversal or break through this level will prove key in laying out the bias for the day ahead.

GBP/USD surge highlights dollar decline

GBP/USD has managed to surge beyond the 76.4% Fibonacci resistance level this week, in a move that points towards a likely end to the weakness seen over the past two months. Once again, the interest rate path of the Fed is likely to be highly accommodative compared with the Bank of England (BoE), and markets are responding.

With that in mind, further upside seems likely, with a rise through $1.3018 providing a bullish breakout signal and end to this recent downtrend. Until then, watch out for whether we get a response at the 200 simple moving average (SMA) level which is currently being challenged.

AUD/USD consolidation likely to resolve higher

AUD/USD has failed to capitalise on the dollar weakness story, with the price consolidating after hitting the 61.8% Fibonacci resistance level. Given the sharp move into this consolidation phase, there is likely to be another leg higher to come, with the price heading back towards the 76.4% level of $0.6694.

However, with the downtrend still intact, there is a chance we will see the pair turn lower. Ultimately, the Reserve Bank of Australia (RBA) is likely to take more action than the ECB or BoE, while the Chinese slowdown is also going to hit the Australian economy harder than most. With that in mind, the AUD is another currency alongside the dollar which is expected to remain under pressure. As such, we await a breakout from this consolidation to provide guidance on the next move, with a break through $0.6774 ultimately required to negate the wider bearish trend.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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