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

With EUR/USD, GBP/USD and AUD/USD all starting to turn lower, are we about to see the resurgence of the greenback?

Pound and dollar currency
Source: Bloomberg

EUR/USD breaks below trendline support

EUR/USD fell below $1.0710 last week, following a rally into the 76.4% (drawn from $1.0874 to $1.0340) retracement last week. With the price finding resistance on that trendline, there is a good chance we are seeing a turn in the market back in favour of the long-term downtrend.

We would need to see a break back below $1.0657 to gain greater confidence that we are actually seeing a reversal. On the short-term, we have seen a pullback to the 76.4% retracement (drawn from $1.0679 to $1.0740), which represents a potential continuation of the gains we have seen since the Friday low. As such, a break back below $1.0679 would provide a short-term signal of further losses, and until that happens there is a chance we could see another short-term rebound.

GBP/USD selling off once more

GBP/USD sold off into the 61.8% retracement on Friday, within a wider uptrend since the low of $1.1986 set on 16 January. Given that uptrend, there is a good chance the current weakness we are seeing may not last.

With the near-term 76.4% retracement at $1.2537 coming into view, it is worth watching this area of support given the bullish implications of Friday’s break above $1.2583. Conversely, a break back below $1.2517 would be a worrying sign, with a move back below $1.2419 providing a signal that we could be in the middle of a reversal for the pair.

AUD/USD showing signs of a reversal

AUD/USD began to turn lower last week, with price breaking below trendline support and more importantly breaking below $0.7517. We saw a rally into both a trendline and the 76.4% retracement on Friday, with the pair turning lower since. This looks to be the beginning of the next turn lower, with an hourly close below $0.7540 providing a signal that we are likely to head back below last week’s low of $0.7511.

We would need to see the pair breaking back above $0.7585 to become bullish once more, with another move lower looking the most likely event from here.

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