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

Short-term dollar strength is dragging EUR/USD, GBP/USD and AUD/USD lower. However, the big question is whether this is going to be a fleeting or long lasting period of weakness.

EUR/USD turning lower once again

EUR/USD is turning lower yet again this morning, in what looks like a three-stage retracement of the $1.2299-$1.2414 rally.

With the pair ascending from the bottom of a three-month range, there is a good chance we will see another leg higher before long, with a drop below $1.2299 required to negate the recent uptrend. As such, further short-term downside is a distinct possibility. Although, longs would be interesting around the Fibonacci support zone $1.2326-$1.2343.

GBP/USD pullback unlikely to last

GBP/USD has also been retracing following recent gains, with the price breaking through the crucial $1.4244 resistance level to solidify the wider bullish outlook. While we are pulling back, the price hasn’t broken below the most recent swing low of $1.4235, meaning the uptrend remains in play.

With the price currently respecting the 76.4% retracement, there is a strong possibility that we are going to see a move higher from here. Thus, a bullish outlook is in play unless we break $1.4235.

AUD/USD challenging crucial support levels

AUD/USD has turned lower into a crucial area of support, following a period of gains for the pair. With short-term price action forming the basis of a head and shoulders formation, there is a strong chance that any further downside would bring about a more bearish outlook.

As such, watch for the reaction to the $0.7738-$0.7752 support zone, where a break and close below that zone would signal a deeper impending pullback towards $0.7689.

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