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 start to reverse lower

EUR/USD, GBP/USD and AUD/USD start to reverse lower, with haven demand helping to drive the dollar higher.

EUR/USD showing signs of a bearish reversal

EUR/USD provided us with a bearish reversal signal yesterday, with the breakdown below $1.0953 bringing the recent uptrend to an end. That break highlighted that the subsequent rally was a likely retracement and precursor to the bears coming back into play. That appears to be happening following a mere 50% retracement.

While the lack of depth to that retracement does raise questions over whether we could see another leg higher to move towards the 61.8%-76.4% Fibonacci zone, the sharp decline we are currently seeing does highlight a strong bearish conviction. As such, irrespective of whether we see that ABC retracement come into play, a bearish outlook is in play unless we see the $1.1147 level broken. Confirmation of this bearish reversal comes with a break below the $1.0927 low.

GBP/USD declines raise prospect of double top formation

GBP/USD has been losing ground overnight, following on from a rally that failed to regain the $1.2485 peak seen on Friday. That inability to maintain higher highs does raise the possibility of a bearish reversal, with a double top formation completed if the price breaks below the $1.2244 swing low.

That certainly hasn’t happened as things stand, and thus we are currently in limbo where a break through $1.2485 (bullish) or $1.2244 (bearish) would provide a more confidence outlook for the pair as we move through the week.

AUD/USD starts to roll over after recent ascent

AUD/USD has also started to look rather toppy, following on from a week of gains that managed to regain over half the losses seen at the beginning of March. However, that bearish trend looks like it could come back into play here, with the pair failing to create a new high, and subsequently breaking below the $0.6067 support level.

Confirmation of this bearish reversal move comes with a break below the $0.6023 level, especially given the fact that the recent lows are perfectly on the 76.4% Fibonacci support level. As such, while it looks like we are seeing the beginning of a bearish reversal, watch for a break below the $0.6023 level to confirm this shift in market sentiment.

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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