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.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.