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

The dollar is coming back into focus, with potential weakness on the cards for EUR/USD, GBP/USD and AUD/USD. 

Source: Bloomberg

EUR/USD showing signs of weakness

The bearish EUR/USD picture is finally starting to come through once more, with Friday’s sharp sell-off leading to a break below the near-term $1.0563 support level. This morning’s rally is expected to be a fleeting one and, as such, a break lower is expected before long.

An hourly close below $1.0552 would be a signal that this next leg lower is occurring. Should that happen, it is likely the selling will ramp up, as it adds greater confidence that this reversal is in play. A break above $1.0618 would be required to negate the bearish implications of Friday’s sell-off.

GBP/USD bullish breakout fails to extend

GBP/USD has sold off sharply over the weekend, with talk of a second Scottish referendum ruling out the nice bullish triangle breakout we had seen for the pair.

This has brought us back into the $1.2388 support level, which could be crucial to stopping the rot. Watch out for the response at this level as a bounce here could retrace a decent amount higher, given the strength of the recent weakness. Otherwise, a break below $1.2388 could provide a clue that we are set for a period of further weakness.

Is AUD/USD going to reverse or breakout?

AUD/USD continues to consolidate below the crucial $0.7732-0.7835 resistance zone, coming off the back of a strong uptrend for the pair. This is the region where we could easily see a reversal, yet price action has not yet told us that is the case.

A break and hourly close below $0.7649 would be a strong sell signal, whereas a move below $0.7606 would increase the confidence that such a move is in the offing. Until then, the uptrend remains intact and thus further gains are still a distinct possibility. 

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