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

European currencies seem to be underperforming, with EUR/USD and GBP/USD threatening to push lower. Meanwhile, AUD/USD is attempting to break higher following a double bottom formation.

Source: Bloomberg

EUR/USD continues to stall at key support

EUR/USD continues to trade sideways above the $1.0851, in what looks like a possible precursor to a strong move lower. A break and close below $1.0851 would provide greater confidence that we are going to see the next medium term retracement come to fruition for the pair. That would point towards a potential move into the likes of $1.0785 (50%), $1.0734 (61.8%) or $1.0671 (76.4%).

Until then, there is a chance that with an hourly close above $1.0893 we could retrace into $1.0950 region before turning lower once more. 

GBP/USD could be heading towards retracement phase

GBP/USD sold off sharply yesterday, following the Bank of England (BoE) meeting. This brought the price back into the 76.4% retracement, with the price subsequently moving higher.

However, those gains were negated by this morning’s subsequent sell-off, which is threatening to push below yesterday’s low of $1.2849. Ultimately, we would need to see an hourly close below $1.2831 to provide a bearish signal. Given the gains we have seen over recent weeks, such a signal would likely pave the way for a protracted move lower towards the wider Fibonacci retracements of $1.2677 (50%) or $1.2603 (61.8%). However, first we would need to take out the $1.2831, and until that happens there is still a good chance that this recent uptrend will kick in again.

AUD/USD challenging double bottom neckline

AUD/USD has been confounding the European markets this morning, with the price moving back through the key $0.7395 level. That marks the neckline of a double bottom. An hourly close above that level would look likely to pave the way for a more protracted move higher for the pair.

Yet, with a wider downtrend in play, any such move would likely be short-term in nature rather than indicative of a long-term reversal.

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