Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

FX levels to watch – EUR/USD, GBP/USD, AUD/USD

US dollar weakness appears to be a theme as we close the week, as EUR/USD, GBP/USD and AUD/USD are all gaining ground. But with EUR/USD and AUD/USD at potential reversal points, could we see the dollar's come back?

Euro notes
Source: Bloomberg

EUR/USD could reverse lower

EUR/USD has continued to grind higher, amid a rebound for the pair off the back of this week’s key bearish break below $1.0525. This rally is expected to fall short and turn lower soon enough, yet the question is where will that happen? The safest option is to say the $1.0679 swing high is the best level to be drawing your fibs on, with a break above that level being the event to negate the bearish view.

However, with price in a rising wedge pattern, there is a very good chance we could see a break lower before the $1.0630 shorter-term swing high. As such, look for shorts around the 76.4% retracement, and at $1.0598 for a move back down to $1.0494. With the stochastic overbought and tightening (last bearish cross marked reversal lower), coupled with the price reaching the apex of this bearish wedge, it seems likely the bears will come back soon enough. 

GBP/USD breaks higher from triangle

GBP/USD managed to break higher yesterday, working out perfectly following the initial signs of a bullish move late on Tuesday. The break through $1.2483 provided the first new high, which when followed up by a 76.4% retracement, gave an ideal entry point.

The sharp rally through $1.2508 now gives us greater confidence that we will see further gains, yet look out for a potential pullback if looking for new entries. A break back below Wednesday’s low of $1.2420 would negate this bullish view.

AUD/USD rallies into major resistance zone

AUD/USD has continued to gradually gain ground, with the pair pushing into an absolutely critical resistance zone. This zone is a prime area for a potential reversal, yet for that to come into play we would need to see the price breaking to a new lower low.

With that in mind, watch out for a potential break lower, an hourly close below $0.7649 would bring a more bearish outlook. Until then, while the uptrend remains intact, the existence of this major resistance zone ahead means it does not make sense to get long for now.

AUD/USD price chart

AUD/USD price chart

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.

Find articles by writer