EUR/USD, GBP/USD and AUD/USD risk bearish reversal despite recent volatility

EUR/USD, GBP/USD, and AUD/USD remain at risk of a bearish reversal, as risks raise demand for the dollar.

EUR/USD pauses after yesterday’s sharp ascent

EUR/USD has consolidated overnight, following a sharp move higher yesterday. The bearish reversal picture does come into question with a break through $1.1832, yet we remain back at the 76.4% resistance level for now.

Taken in isolation, this current pause looks like a precursor to further gains. However, that wider bearish trend raises questions of such a move. As such, the reaction to this Fibonacci ($1.1799) and horizontal ($1.1832) resistance zone will be key in determining whether that bearish trend remains in play or not.

GBP/USD stabilises after Fibonacci decline

GBP/USD has stabilised after yesterday's decline which came off the back of a rally into the 76.4% Fibonacci level. With the recent creation of flat-lining lows, there is a question over whether this recent consolidation could be a top.

However, we would need to see a break below the $1.2862 support level to bring about a fresh bearish reversal signal. Until then, the gradual uptrend seen over the past month remains in play.

AUD/USD declines as RBA minutes signal impending easing

AUD/USD has seen further downside after the Reserve Bank of Australia (RBA) minutes released overnight highlighted the prospect of further quantitative easing and interest rate cuts in November. With global growth concerns likely to hit commodity prices, the Australian dollar does look at risk here.

From a technical perspective, this latest decline takes us closer to the crucial $0.7006 support level. A break below that threshold would bring about a three-month low to further solidify the current bearish reversal trend. For the near term, the key is to maintain the trend of lower highs and lower lows. As such, a bearish outlook holds unless we see the price break through the $0.7115 swing high.

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