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

An attempted break lower for GBP/USD, AUD/NZD, and GBPJ/PY could spark a bullish reversal or bearish breakout.

Source: Bloomberg

US Dollar Index continues to track SMA
The Dollar Basket continues to find support from a cluster of 4-hour moving averages (50-, 100-, and 200-), in particular the 50-simple moving average. The gradual grind higher means we are seeing higher lows, yet to the upside we remain below 96.42, which means a symmetrical triangle is in play.

As such, any significant move higher would need to see price break through 96.42. Conversely I would need a move back below 95.86 to continue the selling that has been in play over the past three trading days. Above 96.42, key resistance points are initially at 96.71 and 96.89. Below 95.86, the next key support level ids at 95.60.

GBP/USD breaks below support, yet selloff unconvincing for now
We saw GBP/USD break below the key $1.517 support level yesterday, yet the previous failed break lower provided us with another support level to watch, at $1.5135. The pair has since fallen back down to that level on a number of occasions and price is currently contending with it.

Thus while the initial tentative sign is that we are going to break lower, I want to see a close below $1.5135 to finally signal a bearish spark that would point towards a move back to $1.5.

GBP/JPY consolidates at long term trendline
GBP/JPY continues to trade in a symmetrical triangle formation, with the 50-period (4-hour) SMA above current price action whereas a long-term trendline (dating back to 14 October 2014) rests below. Given the existence of that major long-term trendline, a break lower would be highly notable.

However, it also gives us a possible source of a bullish reversal and thus I will be watching carefully to see what GBP/JPY does from here as it has meaningful connotations. For me to believe we are seeing a bullish reversal I would need to see a break above Y182.5. Conversely, watch for a break below Y181.2 to point towards a possible strong selloff.

AUD/NZD reaches lower end of triangle
AUD/NZD has reached the lower end of the symmetrical triangle that has been respected for almost two months now. Price currently appears to be passing through that trendline, yet below this we have a whole raft of reversal points between NZ$1.0946 and NZ$1.0929.

Thus I am on the lookout for a reversal signal which would come should price break back above NZ$1.1032 which would point towards a move back to NZ$1.11 and NZ$1.115. 

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.

Find articles by analysts

Find out more about