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The dollar has been dominating of late, with EUR/USD, GBP/USD and AUD/USD all losing ground. However, with tentative signs of strength, there is a good chance we will see a short-term rebound.
EUR/USD has been selling off sharply throughout the latter part of the past week, with the pair moving towards the crucial $1.1526 support level.
The wider trend points towards a recent inverse head and shoulders formation in play, but should this fall see the pair drop below $1.1526 support, it would largely negate that pattern. With the price failing to break below Friday’s lows thus far, there is a chance that we could see the pair start to regain ground. Ultimately, a break below $1.1526 would signal a bearish wider view coming into play. Until that happens, watch for a potential recovery from here, with a break above $1.1629 adding greater confidence to that upside potential.
GBP/USD has seen a sharp decline below $1.3055 over the past week, with the price creating a new lower low after the recent 61.8% upside retracement.
Despite the broader uptrend over the past month, there is a possibility we could see this move as a wider retracement of the $1.2785-$1.3299 rally. For now, there is a good chance that we could rebound, given the bullish engulfing pattern in play. However, such a move would likely provide a retracement of the downturn from $1.3217 before we reverse lower once again. This brings the wider retracement into view, with a possible drop towards $1.2981 and even $1.2906.
AUD/USD has been turning lower from the 76.4% retracement, with the pair looking likely to continue towards the downside.
The Friday rally into the $0.7236 swing low, alongside the 200-day simple moving average (SMA) on the four-hour chart, provided another turn lower. As such, watch out for the pair to continue lower. Should we see a rally through the 200-day SMA, then this would look like a retracement of the sell-off from the $0.7320 level.
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