FX snapshot – GBP/USD, EUR/USD, AUD/USD, EUR/GBP

EUR/USD backs away from major support levels, yet a break lower could bring significant deterioration for the single currency.

GBP/EUR
Source: Bloomberg

GBP/USD indecision reigns, yet upside likely
GBP/USD has been consolidating over the past three days following a bottom back on the 8 July. Despite the broadening formation that is in play, which exhibits lower lows, I primarily see this as consolidation. As such, I expect a move higher given the entry into this formation.

The $1.555 support level is crucial and I would be looking for bullish reversal candlestick formations around that level for a move higher. With that in mind, I expect us to see a move towards $1.5747 in the near future. However, my bullish outlook would come under question below $1.5447.

EUR/USD tests double top neckline with potential bearish implications
EUR/USD has seen a bounce from $1.0819 support this morning, and it is this level which will dictate the state of play for the week. A daily close below this level would complete the double top formation and thus point towards a projected move down towards $1.0170.

However, with the small bounce we have seen so far today, there is a possibility that we could see some form of a recovery from this point. That said, I would need to see a move above $1.0907 to provide confidence that we will see further upside throughout the week. Until that happens, I expect the bearish sentiment to continue, to push us back towards that crucial $1.0819 support level.

AUD/USD begins to sell off for the next leg lower
AUD/USD is showing signs that the overnight strength could be over, and it looks likely that we will see more downside throughout today’s European session. The 20-period simple moving average is usually a good support and resistance indicator in clear trending markets, which this pair is increasingly becoming.

Near-term support is provided at $0.7365 (Maribuzo support), yet I believe this will be short-lived and we will see a move below $0.7330 to create a new six-year low.

EUR/GBP spike likely to be shortlived
The spike higher we have seen in EUR/GBP this morning has brought the price back to the 50-hour SMA, which has provided a reliable backstop to price rises over the last week.

With that in mind, I am watching for the final finished hourly candle in play and any close below the 50-hour SMA would create a shooting star candle, thus bringing a bearish outlook for a move back towards £0.6936. However, a move above £0.699 would bring a more bullish outlook to proceedings which would target £0.707.

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