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

Will we see further dollar strength, following a period of weakness across EUR/USD and AUD/USD? Given the rally in GBP/USD, there is also a case for the pair to begin selling off once more from here.

Euro notes
Source: Bloomberg

EUR/USD downtrend continues

EUR/USD has been selling off in a consistent manner since topping off last week, with a break below $1.0719 in particular leading to a more bearish outlook. That said, this pullback is seen within a wider context of higher highs and higher lows on the daily timeframe.

As such, look out for this current sell-off to be a potential retracement of the rally from $1.0494, with the Fibonacci support levels coming into view. We have seen the 61.8% come into play already, marking the low of last week. An hourly close below that level points towards another decent leg lower, with $1.0591 (76.4%) a potential destination. Conversely, an hourly close above $1.0702 could signal that the 61.8% is the ‘be all and end all’ for this sell-off.

EUR/USD price chart

GBP/USD rallies into key Fibonacci retracement

GBP/USD is turning lower this morning, following a period of strength that has seen the pair move back into the 76.4% retracement. This is particularly notable given that we broke below $1.2424 last week.

That means that we are likely seeing a market reversal here, and as such a deep retracement is often evident in such circumstances. A bearish outlook is in play here, with a break through $1.2316 required to negate this view.

GBP/USD price chart

AUD/USD approaching crucial support level

AUD/USD has sold off sharply throughout Friday, with the pair approaching the $0.7587 support level. That is an absolutely crucial mark which, if broken, would lead us to a significantly more bearish outlook for the pair. Given that we are seeing a wider move from a crucial trendline and horizontal resistance zone ($0.7740 upwards), there is a good case for a market top here.

The creation of a lower high since a break below $0.7587 would provide us with a new low, thus pointing towards a downtrend for the pair. As such, much of today will be dictated by the ability or inability to break this level, given the consequences of either scenario.

AUD/USD price chart

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.