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

A potential resurgence for the dollar appears to be in the offing, with EUR/USD trending lower and AUD/USD showing signs of indecision around a crucial historical resistance zone.

Euro and US dollar notes
Source: Bloomberg

EUR/USD consolidates within downturn

EUR/USD has consolidated overnight, following on from a weak end to last week. The break lower from the 76.4% retracement points toward the potential for a prolonged period of downside.

An hourly close below the $1.0603 mark would provide a near-term sell signal for another leg lower. Conversely, an hourly close above $1.0627 would point towards a bigger move higher, toward the $1.0647 region.

GBP/USD to bounce from triangle bottom?

GBP/USD is trading around an important support region, following on from Friday’s weakness for the pair. The continued rallying we have seen from this region has provided a trendline support and symmetrical triangle formation.

With the stochastic crossing in a bullish manner (which has provided reliable buy signals on past two occasions), there is a good chance we could see a bounce from here. The breakout we are looking for is either an hourly close above $1.2524, or below $1.2388. Until either happens, the triangle remains the subject of our attention.

Could AUD/USD uptrend come under pressure?

AUD/USD has posted a second consecutive doji candle on the weekly timeframe, following a strong run into the crucial $0.7730-$0.7835 resistance zone. That historical zone has seen the market turn lower on a number of occasions. With that in mind, there is a good chance we could start to see this market weaken. For a bearish view to come into play, we would need to see a break below $0.7637.

However, until then a convergence of two trendlines should form sufficient resistance to limit further upside. That said, we would need to break through the $0.7700 region to feel confident of further gains. Until then, watch out for potential reversal signs to set us up for a prolonged period of weakness for the pair.

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