EUR/USD, EUR/GBP and AUD/USD drop as RBA holds rates steady
Outlook on EUR/USD, EUR/GBP and AUD/USD as the euro slips on brought forward rate cut expectations and the US dollar regains some recently lost ground.
EUR/USD weighs on 200-day simple moving average
EUR/USD's reversal off Wednesday’s four-month high at $1.1017 on softer eurozone inflation, which brought forward European Central Bank (ECB) rate cut expectations to between 125 to 150 basis points (bps) next year, led to four straight days of losses and the 200-day simple moving average (SMA) at $1.0822 being slid through. A daily chart close below it would indicate that a top is being formed with the mid-September and early-November highs at $1.0769 to $1.0756 eyed.
Minor resistance above the 22 November low at $1.0853 can be spotted at Monday’s $1.0886 high and also at Friday’s $1.0912 high.
Further up the $1.0945 late-August high also represents a possible resistance level, together with the 21 November high at $1.0965.
EUR/GBP’s sharp reversal off its six-month high nears its mid-September low
Over the past few weeks EUR/GBP has swiftly come off its six-month high at £0.8766 amid fresh signals that the ECB will start cutting interest rates before the Bank of England (BoE), following the latest comments from BoE’s hawks that interest rates may stay elevated for longer. In November the currency pair saw its biggest monthly loss since May.
The early-June and mid-September lows at £0.857 to £0.8568 are now within reach and may offer short-term support, together with the late July low at £0.8545. If not, the July and August lows at £0.8504 to £0.8493 would be back in sight.
Minor resistance now sits between the late-August high and the October low at £0.861 to £0.865.
AUD/USD comes off its 3 ½ month high
Monday’s AUD/USD advance to a new 3 ½ month high at $0.6688 has been followed by a fall through its November-to-December uptrend line at $0.6626 as the Reserve Bank of Australia (RBA) kept its rates unchanged at 4.35%, in line with market expectations.
A drop towards the August, September and early November highs at $0.6523 to $0.6511 now seems to be on the cards. This support area is expected to hold, at least short-term, though. For now the 200-day SMA and Thursday’s low at $0.6608 to $0.6571 offer immediate support.
Resistance comes in along the breached November-to-December accelerated uptrend line, because of inverse polarity a resistance line, at $0.6626.
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