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

US dollar strength appears to be back in force, with EUR/USD, GBP/USD and NZD/USD all selling-off sharply. With major support levels being broken in GBP/USD and NZD/USD, we look set for a period of weakness ahead. 

Euro notes
Source: Bloomberg

EUR/USD sell-off interrupted by ECB rumours

Yesterday saw EUR/USD fall sharply, in line with the bearish sentiment that has been driven by the wider longer term picture. However, the release of a Bloomberg article referencing a more hawkish mentality at the European Central Bank (ECB) subsequently sent the pair higher.

Crucially we have not seen price break above the more recent swing high at $1.1251 and as such, another bearish reversal lower seems likely today. Given the existence of trendline resistance alongside the continued creation of lower highs, a bearish view remains in play for a move into the $1.1123-$1.1150 support zone.

An hourly close above $1.11251 and in particular $1.1279 would negate this view.

GBP/USD weakness looks set to continue

IN_GBPUSD has seen yet further selling this morning, following yesterday’s dramatic fall into a new 31-year low. We have precious few support levels to the downside and as such, there is little holding back this sell-off.

On the hourly timeframe, the pair is currently rallying much of this morning’s weakness. However, until we see the creation of a new higher high, any such retracement looks like a good opportunity to get short once more. Unfortunately, the bearish nature of this trend means we are seeing little consolidation and thus the descending consolidation means we have less well defined swing highs.

Nevertheless, watch out for a reversal lower from below the $1.2746 resistance level, which is also accompanied by the descending trendline resistance. 

NZD/USD breaks below crucial support level

IN_NZDUSD has broken below the crucial $0.7209 support level overnight, thus completing the head and shoulders formation which has been in construction for almost two months. Given this break below $0.7209, a period of weakness seems likely for the pair, despite the current bounce.

Any upside would be looking towards the $0.7209 resistance level as a potential reversal point. A break and close above $0.7209 would weaken the bearish story, yet we would need an hourly close above $0.7311 to negate the bearish outlook.

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