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EUR/USD and AUD/USD look likely to gain ground over the short term, with GBP/USD providing the notable outlier amid a breakdown in Brexit talks. However, whether such gains will last is another question.
Friday saw EUR/USD attempt to reverse some of its recent gains, with the break through $1.1549 and $1.1594 providing a bullish reversal signal.
We do not know the size of this current retracement, yet unless we reverse the whole of last week’s rally and break below $1.1432, then this current weakness is unlikely to last. As such, another push higher looks likely before long, with the pair expected to rise into a deeper retracement of the $1.1815-$1.1432 decline.
GBP/USD has started the week in bearish fashion, with the inability for the UK and EU to find a positive conclusion to negotiations highlighting the potential for further downside in the near term.
The path for the pound will be determined by the outlook for negotiations and ultimately the ability or inability to reach a positive conclusion. For now, the failure to agree ahead of the upcoming EU summit means markets are likely to have a more bearish short-term outlook. Look out for the Fibonacci support levels to hold up any such downside.
AUD/USD is regaining ground, following the failure to create a new low below $0.7044. The peak of $0.7131 remains a key level to overcome if the pair is going to regain further ground.
However, such upside would look likely to provide yet another selling opportunity from either trendline or Fibonacci resistance. As such, further upside could come into play for the short term, yet unless we break above the $0.7315 resistance level, any such rally would be unlikely to last.