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

Dollar downside sees gains across EUR/USD, GBP/USD and AUD/USD. However, with the potential for further downside, these moves could be fleeting.

GBP/USD
Source: Bloomberg

EUR/USD closes gap after German election sell-off

EUR/USD has regained ground after an initial gap lower in the wake of the news that we could be heading back to the polls in Germany.

With the price gradually trending lower in the wake of the rally up through $1.1836, there is a good chance we could be set for further short-term losses. A break up through the $1.1822 level would negate this short-term bearish view. Until then, watch out for a possible weakening, as long as the price remains below $1.1822.

GBP/USD rallies towards trendline resistance

GBP/USD has seen sharp gains in early trade today, with the price moving into a two-week high. However, with the price moving into trendline resistance, and with the stochastic indicator overbought, there is a good chance we could see a retracement from here.

That being said, we would need a break back below $1.3186 to negate the short-term uptrend, with the price still not reaching the upper bounds of the range in place for over a month. With that in mind, a short-term pullback could subsequently provide another leg higher. However, should we reach it, look out for this market to start its turn lower from around the $1.3310 region in respect of the wider range.

AUD/USD rallying back towards trendline resistance

AUD/USD is similarly gaining ground this morning, following on from a clear recent downtrend for the pair. Given the wider downtrend, there is a strong chance that we will see another leg lower before long.

Therefore, any further upside would be viewed as a selling opportunity, if the price does not break back above $0.7608. Watch out for the Fibonacci resistance as a potential area for the market to turn lower, with the 61.8% looking like an interesting area, given the confluence with trendline support.

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