FX snapshot: US Dollar Index, GBP/USD, AUD/USD, AUD/NZD

Dollar strength comes into question with the formation of a head and shoulders pattern emerging.

EUR/USD
Source: Bloomberg

Dollar forms a short-term head and shoulders
Yesterday saw the strong move higher for the Dollar Index that we were looking for. Yet the signs are we could be set for a move lower given that price is currently breaking below the 96.40 neckline.

This provides a downside projection of 96.15, which seems close enough to be reached today. I would need to see a close below 96.40 for this bearish outlook to be activated.

GBP/USD breaking below key support level following selloff
GBP/USD has broken sharply lower yesterday, with price in the process of now breaking below the $1.533 support level which has been respected both recently and historically.

The likes of the MACD and stochastic point towards some form of bounce, yet an intraday close below $1.533 would provide us with expectations of a move back towards the $1.5191 and $1.517 region. 

AUD/USD on clear downward trajectory
AUD/USD has been moving on a very clear downward path over the past three trading days, following a resurgence that lasted almost two weeks. The 50-day simple moving average provided the necessary resistance to move the pair lower and since then we are seeing a very consistent move lower.

As such, I expect this to continue and am looking for the strength seen this morning to give way to further selling. I am bearish as long as price remains below the previous swing high, on this occasion, $0.7097.

AUD/NZD head and shoulders points to possible losses
AUD/NZD has seen price break out from the top of its symmetrical triangle formation in a bullish manner. However, price has since held up and formed a head and shoulders pattern, which would have bearish connotations.

Given the existence of the trendline support around NZ$1.1211, I would need to see a break and close below that level to gain confidence that we will reach the head and shoulders target of NZ$ 1.108.

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.