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

Gains across EUR/USD, GBP/USD and AUD/USD all portray a picture of US dollar weakness. However, is this just a temporary thing before the dollar comes back into strength?

Euro and dollar notes
Source: Bloomberg

EUR/USD upside likely to be fleeting

EUR/USD has gained some ground overnight in a retracement of the weakness we saw on Monday. The pair is trading within a falling wedge pattern, yet despite the bullish connotations associated with this pattern, we would need to see a break through $1.0659 to provide a more bullish outlook.

Until then, there is a good chance that any short-term gains are fleeting, with further losses around the corner. A break below $1.0589 would be a significant signal that we are going to see further downside given that it represents a significant swing low from January.

GBP/USD wedge points to weakness

GBP/USD has been similarly gaining ground overnight, yet with the stochastic rolling over and price not having broken through $1.2582, it is likely we will see the pair push lower before long.

A break above $1.2582 would provide a more bullish picture but, even then, we would need the $1.2706 level to be surpassed to gain confidence of any sustained upside.

AUD/USD pushes into key resistance

Despite a short-term pullback yesterday, we are seeing the pair pushing into the key $0.7695 region this morning. The Australian dollar has been particularly strong of late and a move through that resistance level would provide a strong bullish breakout signal.

As such, watch out for a closed hourly candle above $0.7695 for a bullish breakout. Alternately, a break back below $0.7630 would start to look like this recent upside could begin to unravel.

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