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

Dollar is strengthening, with EUR/USD, GBP/USD and AUD/USD all turning lower to start the week.

USD
Source: Bloomberg

EUR/USD has potential for bearish turnaround

EUR/USD has drifted lower overnight, in what has been a strong week for the pair. However, with the price having moved into the 76.4% retracement, there is a chance we could see some weakness come into play, as long as we remain below $1.1691.

Interestingly, transposing the trendline from the recent lows onto last week’s high, provides us with the absolute top of trading on Friday. As such, while we are seeing some strength coming back into play, watch out for trendline resistance. As long as the price does not break through $1.1687 resistance, then a bearish view remains in play.

EUR/USD chart

GBP/USD tanks after report of no confidence in PM May

GBP/USD has started the week with a sharp drop after reports of 40 Tory MPs willing to sign a vote of no confidence in Theresa May. While that is eight short of the required amount, it obviously raises the possibility of further leadership instability. The pair has subsequently dropped into the key $1.3085 support level, where a break below that level would bring a possible move back into the key $1.3030 support.

A move below $1.3030 would be crucial in signaling a possible move out of this recent month of consolidation. As such, initially watch out for how this pair reacts to $1.3085, with an hourly close below that level pointing towards a move into $1.3030. However, it is that level which is the ultimate hurdle that needs to be overcome, to break into a period of further downside.

GBP/USD chart

AUD/USD breaking lower after deep retracement 

AUD/USD managed to turn lower in time on Friday, with the price rallying closely to the key $0.7701 resistance level. However, with the price selling off since, we have now seen a move below the $0.7649 level to complete a double top formation. This adds greater credence to the bearish outlook.

As such, with the wider outlook creating lower highs and lower lows, further downside looks likely to come, with a move back below $0.7627 expected before long. A break above $0.7701 would negate this bearish outlook.  

AUD/USD chart

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