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

US dollar strength once more dominates, with GBP/USD, EUR/USD and AUD/USD tumbling lower in early trade.

Euro notes
Source: Bloomberg

EUR/USD downtrend expected to continue

EUR/USD saw significant volatility on Friday, following a largely negative non-farm payrolls release. However, the US dollar has proved resilient and this is expected to push EUR/USD to further losses today. So far we have seen the 38.2% retracement provide resistance. However, any further upside would simply be seen as a better short entry opportunity.

This bearish view remains unless we see a closed hourly candle above $1.1482. Key support levels of note are $1.1380, $1.1339 and $1.1310.

GBP/USD tumbles after consolidation breakout

GBP/USD is extending losses after Friday’s downside breakout for the pair. This came after a sharp rally into the 76.4% retracement. We expect to see further losses in play today, with retracement seen as opportunities to go short once more.

As such, any pullbacks will be expected to fall short of the $1.4450 mark. A closed hourly candle above $1.4450 would negate this short-term bearish view.

The key support area to watch out for is $1.4348 and a crucial trendline (currently $1.4336) dating back to December 2015.

AUD/USD expected to fall once more

AUD/USD is once more looking in trouble, after weak Chinese imports data provided traders with yet another reason to sell the currency. The key here is that we are seeing a relatively consistent downtrend over the past week, which seems likely to continue apace.

A closed hourly candle below Friday’s low of $0.7337 would provide a strong sell indicator, given that this is also the area of the 100-day simple moving average. Should that occur, the 200-day SMA comes into view ($0.7260) as the next possible support level. This bearish view holds unless we see a break through $0.7394 resistance.

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