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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

EUR/USD, GBP/USD and AUD/USD rebound unlikely to last

EUR/USD, GBP/USD and AUD/USD see near-term gains after a volatile US CPI reading, but wider bearish trends point towards potential bearish reversals before long.

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EUR/USD volatility resolves in a push higher

EUR/USD has started to reverse upwards after a day of major volatility which saw US core inflation reach a 40-year high of 6.6%. Nonetheless, while we initially saw the price drop back into the 76.4% Fibonacci support level, we have resolved with a risk-on move that is driving EUR/USD upwards.

Crucially, that move has brought the price up through the $0.9774 resistance level, ending the intraday trend of lower highs. Subsequently, we turn towards the wider trend, with a descending trendline built over the course of 2022 providing a potential upside target.

With the ongoing pattern of lower highs evident here, short-term upside looks to provide a potential selling opportunity. That view would be negated with a push up through the trendline and $1.00 handle. Potential points of reversal are provided by the Fibonacci tool, with $0.9815, $0.9859 and $0.9913 in view.

EUR/USD chart Source: ProRealTime
EUR/USD chart Source: ProRealTime

GBP/USD rebound takes the price back into trendline resistance

GBP/USD has been on the rise since yesterday’s consumer price index (CPI) fuelled volatility, with the price rising back towards a key confluence of resistance. The descending trendline and 76.4% Fibonacci resistance level point towards a potential swift bearish reversal if the ongoing trend of lower highs is to continue.

With Kwasi Kwarteng expected to return to the UK early to discuss further potential budget U-turns, we may yet see another boost for the pound.

Nonetheless, unless the price rises through the $1.1495 swing high, there is a good chance that the price soon reverses downwards to continue the trend of lower highs evident over recent months.

GBP/USD chart Source: ProRealTime
GBP/USD chart Source: ProRealTime

AUD/USD rallies into key resistance zone

AUD/USD similarly found a bid yesterday, with soaring underlying inflation in the US signalling a likely continuation of the Federal Reserve (Fed) tightening planned over the coming months. Meanwhile, the latest 25-basis point (bp) hike from the Reserve Bank of Australia (RBA) signal a far slower pace of tightening in Australia.

This explains the relative underperformance we are seeing here, with the price still far from the major swing high of $0.6547. Instead, we have seen the price rise back into the intraday swing high of $0.6346, which also tallies up with the late-September low of $0.6363.

A break up through that zone of resistance would bring a wider rebound into play. However, until that happens, there is a good chance we see the price reverse lower from this resistance zone.

AUD/USD chart Source: ProRealTime
AUD/USD chart Source: ProRealTime

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