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

We are seeing somewhat inconsistent messages in the FX space. However, the growing theme is that we could see further USD weakness over the short term, before the wider trend comes back into play.

EUR/USD rallies into Fibonacci resistance

EUR/USD has been gaining ground since Friday’s low, with the price rallying into the $1.1703 Fibonacci resistance this morning. Given the rally above $1.1727 in the past, there is a potentially bullish story coming into play.

However, we would need to see a break above $1.1852 to provide greater confidence of such a move. A rally above the near swing high of $1.1758 would provide a cue that we could be heading back towards the $1.1852 high. Until then, we could see a continue drift lower in accordance with the weakness seen since Monday’s $1.1791 high.

GBP/USD breaks above swing high resistance

GBP/USD has managed to gain a significant amount of ground since Friday’s low, with the rally through $1.3245 pointing towards a potential resurgence coming into play for the forthcoming days.

The wider break above $1.3315 provides another signal that we could be set for a more bullish phase. With the price breaking into a new higher high this morning, following a drop into the 76.4% retracement, there is a good chance that we could see any near-term downside as a buying opportunity rather than bearish signal. As such, while there is a good chance we could see weakness over the coming 24 hours, it may make sense to view this as a retracement before we break higher. A break below $1.3102 would negate that view.

AUD/USD gradually regaining ground

AUD/USD has been regaining ground over the past few days, with the pair attempting to build on the bullish break above $0.7443 a week ago.

That break looks to pave the way for a rally above the $0.7484 swing high. This wider recovery may continue, yet it should be reminded that this looks like a retracement of the sell-off from $0.7676. As such, the pair is expected to break lower at some point between the current level and $0.7676. That bearish view would come into play with a drop below the recent swing low (currently $0.7360).

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