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

There are mixed fortunes across the FX spectrum, with EUR/USD losing ground to the dollar, while the pound attempts to push higher once more. Meanwhile, we are looking for a potential short-term bounce in AUD/USD.

Euro and US dollar notes
Source: Bloomberg

Fibonacci frenzy could spark EUR/USD reversal

EUR/USD has been respecting the 76.4% retracements very well of late, with yesterday seeing yet another deep retracement turn lower.

Given that we are within a wider retracement which has hit the 76.4% pullback of the referendum sell-off, we are looking out for signs of a bearish reversal from these levels. This current sell-off could provide that, with a break and hourly close below $1.1271 marking the creation of a double top formation. Below that, the $1.1241 support level is also a crucial hurdle to overcome.

However, a bearish view remains and is gradually looking more likely to come to fruition. As such, the wider picture means a bearish view is held unless we see an hourly close above $1.1428. However, on the short-term, the day’s direction is likely to be dictated by whether we see an hourly close below $1.1271 or not.

GBP/USD set for one last leg higher?

IN_GBPUSD appears to be on the ascendancy again this morning, following on from a sell-off into trendline and horizontal support at $1.3157. Ultimately, while a bearish view is preferred, this all plays into the plan, with a rally into trendline/76.4% resistance expected until we start to see the bears dominate once more.

With that in mind, while today could easily see a short-term bounce, it makes sense to look out for a potential reversal from the upcoming resistance zone for this market to get back on trend once more.

USD/JPY trading within triangle formation

IN_USDJPY has been consolidating over the past week, with price action forming a clear symmetrical triangle, rotating around the 100 level. Given the downtrend coming into this pattern, a move lower is preferred.

However, we will take our lead from the breakout, with an hourly close below ¥99.64 providing a bearish view, while an hourly close above ¥100.93 would give a more bullish view. Until that happens, expect this pattern to continue.

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