FX levels to watch: EUR/USD and AUD/USD
EUR/USD and AUD/USD look set for further downside, with the dollar coming into strength despite the US government shutdown.
EUR/USD rebound provides selling opportunity
EUR/USD as managed to rebound substantially following a sharp deterioration yesterday. That sell-off follows on from the inability to continue creating higher lows, after Friday’s drop below $1.1364. Given this recent trend of lower highs and lower lows, the rebound seen overnight looks like a good selling opportunity.
A break above $1.1414 would provide a warning signal that such a bearish move might not come to fruition, with a move above $1.1439 signalling the end of this recent trend.
AUD/USD waiting for next breakdown
AUD/USD has been trading within a relatively flat range over the past two trading days, in what looks like a very similar pattern to those seen in recent weeks.
On prior occasions these sideways consolidation patterns provide a precursor to another downside sell-off. Thus, the expectation is that we will soon see another sell-off, with an hourly close below $0.7032 providing confirmation that the breakout is occurring. Until then, there is a chance we will rebound from here to continue the consolidation.
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