EUR/USD, GBP/USD and AUD/USD rebound brings potential reversal opportunity
EUR/USD, GBP/USD and AUD/USD rebound into resistance, but wider bearish patterns signal the potential for another downside move.
EUR/USD rally takes the price back into key trendline resistance
EUR/USD has managed to claw back enough ground to take the price into a long-term descending trendline. While the price is yet to engage with the trendline, it is worthwhile noting the potential for a similar fate to previous occasions that the pair has approached this line.
Dollar pressure has certainly eased of late, with traders pondering what might happen when the Federal Reserve (Fed) stop raising rates. However, for now it seems highly unlikely that the Fed will look to cut interest rates anytime soon, with that extended period of elevated rates likely to drive further economic weakness and dollar strength.
With that in mind, this rebound does look similar to the previous occasions, with the pair expected to turn lower once again here. A rise through parity ($1.00) would be required to provide an initial signal that we could be on our way to a more bullish phase. Until then, bearish positions are favoured.
GBP/USD rallies into trendline resistance
GBP/USD has also managed to regain ground, with the UK political system looking to gain stability after Boris Johnson pulled out of the leadership race. With Sunak looking nailed on as the new prime minister (PM), sterling is likely to be encouraged that we essentially have two chancellors at the helm.
Nonetheless, dollar strength is the wider story that will likely dominate this pair, with the recent rebound in GBP/USD reflecting the rebound in stocks. As such, another risk-off move in markets would bring a bearish reversal for this pair. With trendline resistance in play here, there is a good chance we do see a move lower before long.
A rise up through $1.1495 and $1.1738 would be required to bring about a more positive view for the pair.
AUD/USD turning lower from Fibonacci resistance
AUD/USD has found itself on the back foot as we start the week, with the wider bearish trend looking to kick in once again.
Overnight data out of China did little to help the Australian dollar, with imports and exports both disappointing. While the price finally managed to break up through the previous low of $0.6363 last week, this simply took us into the 61.8% Fibonacci resistance level at $0.6403.
As such, another move lower looks likely from here, with a break up through the $0.6547 swing high required to bring about a more positive outlook.
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