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

The dollar continues to come under pressure, with EUR/USD, GBP/USD and AUD/USD gaining ground.

Euro and dollar notes
Source: Bloomberg

EUR/USD bullish reversal suggests developing

EUR/USD is drifting lower at the beginning of the week, yet there are encouraging signs that the bounce we have been looking for is coming to fruition.

The creation of higher highs and higher lows is gradually taking us away from the 76.4% retracement, pointing towards another leg higher for this pair. The ability to remain above $1.1139 is key to providing a clear cut resurgence for the pair. As such, while a bullish view remains in play as long as we remain above $1.1109, the $1.1139 level is the crucial level of support, which needs to hold today for the bullish view to stay strong.

GBP/USD approaching key 76.4% retracement

GBP/USD is continuing its ascent this morning, as we see the pair move closer to the crucial 76.4% Fibonacci retracement level ($1.2761). There is a clear downtrend in place over recent months, which is expected to be maintained. For that to occur, we would require this market to remain below $1.2814.

As such, shorts look attractive around these areas on the basis that we will see another move lower in the near future. A break above $1.2814 negates this. Given the difference in this view compared with EUR/USD and AUD/USD, this is clearly a play on sterling weakness more than anything.

AUD/USD continues to rally following deep pullback

AUD/USD is moving higher once more this morning, following a bottoming out of this pair at the 76.4% retracement last week. The consolidation of Friday has now given way to further upside, with gains expected as the day progresses.

Looking at the short term, as long as the price remains above $0.7561, further upside seems the likeliest eventuality.

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