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

With EUR/USD, GBP/USD and AUD/USD all starting to turn lower, are we about to see the resurgence of the greenback?

Pound and dollar currency
Source: Bloomberg

EUR/USD breaks below trendline support

EUR/USD fell below $1.0710 last week, following a rally into the 76.4% (drawn from $1.0874 to $1.0340) retracement last week. With the price finding resistance on that trendline, there is a good chance we are seeing a turn in the market back in favour of the long-term downtrend.

We would need to see a break back below $1.0657 to gain greater confidence that we are actually seeing a reversal. On the short-term, we have seen a pullback to the 76.4% retracement (drawn from $1.0679 to $1.0740), which represents a potential continuation of the gains we have seen since the Friday low. As such, a break back below $1.0679 would provide a short-term signal of further losses, and until that happens there is a chance we could see another short-term rebound.

GBP/USD selling off once more

GBP/USD sold off into the 61.8% retracement on Friday, within a wider uptrend since the low of $1.1986 set on 16 January. Given that uptrend, there is a good chance the current weakness we are seeing may not last.

With the near-term 76.4% retracement at $1.2537 coming into view, it is worth watching this area of support given the bullish implications of Friday’s break above $1.2583. Conversely, a break back below $1.2517 would be a worrying sign, with a move back below $1.2419 providing a signal that we could be in the middle of a reversal for the pair.

AUD/USD showing signs of a reversal

AUD/USD began to turn lower last week, with price breaking below trendline support and more importantly breaking below $0.7517. We saw a rally into both a trendline and the 76.4% retracement on Friday, with the pair turning lower since. This looks to be the beginning of the next turn lower, with an hourly close below $0.7540 providing a signal that we are likely to head back below last week’s low of $0.7511.

We would need to see the pair breaking back above $0.7585 to become bullish once more, with another move lower looking the most likely event from here.

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.

Find articles by analysts