EUR/USD, GBP/USD and NZD/USD rebound likely to prove shortlived
EUR/USD, GBP/USD and NZD/USD gain ground, but dollar dominance looks likely to soon return.
EUR/USD rallies up towards trendline and Fibonacci resistance
EUR/USD has enjoyed a period of respite from the incessant selling pressure that dominated much of September. However, October appears to be more generous to EUR/USD, with the pair regaining ground for much of this week. That optimism is likely to be short-lived, with the price rising into the confluence of trendline and Fibonacci resistance (76.4% at $1.0041).
The wider bearish trend seen throughout this year has followed a very distinct pattern, with the price typically returning to this trendline time and time again after each leg lower. With the troubles of the world far from resolved, it is likely that we will see the price reverse lower from this deep retracement. As such, a bearish view holds unless we see the price rise through the recent swing high of $1.0198.
GBP/USD rebounds back into a key resistance zone
GBP/USD has seen plenty of volatility since Kwasi Kwarteng announced his mini-budget, with an initial capitulation giving way to a recovery period that has taken the pair up through the previous support level of $1.1411. Unlike EUR/USD, we do not have a perfect trendline, but ultimately the bearish trend does remain intact.
Meanwhile, the stochastic oscillator has pushed up into overbought territory, with a move back below the 80 threshold bringing a bearish signal that has proven a good selling opportunity on each other occasion it has occurred this year. A break up through the $1.277 level would bring a wider bullish reversal signal. However, until that happens, there is a good chance that the dollar comes back into prominence, thus sending the pair lower once again.
NZD/USD gains prove shortlived after rate hike
NZD/USD has been attempting to regain ground over the course of this week, with the overnight 50-basis point (bp) rate hike from the Reserve Bank of New Zealand (RBNZ) providing yet another push higher. However, with the Reserve Bank of Australia (RBA) and RBNZ expected to be slowing their tightening phase, we have seen a significantly less convincing rebound for the NZD and AUD.
This is highlighted below, with the gains seen earlier today already fading. In any case, the recovery phase we have recently been seeing does look likely to represent a retracement before the bears return to prominence. That bearish outlook remains in play unless the price rises through the $0.6161 swing high.
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