EUR/USD and AUD/USD drift lower, while GBP/USD consolidates

EUR/USD and AUD/USD continue to lose ground, while political volatility has driven GBP/USD consolidation.

EUR/USD continues to drift lower after head and shoulders breakdown

EUR/USD managed to complete a head and shoulders formation on Tuesday, with the break below $1.181 bringing about a sharp decline for the pair.

We have since seen substantial EUR/USD losses in anticipation of a potential rate cut from the European Central Bank (ECB) today. Given the uncertainty of that event, volatility looks certain. For the near term, a break through the recent swing high of $1.1156 would bring about a signal that we could start to retrace that recent sell-off from $1.1282. Otherwise, a bearish outlook remains in play as the pair continues to create lower intraday highs.

GBP/USD consolidation continues amid uncertain political outlook

The pound has seen a volatile week, with the GBP/USD showing little preference for a bullish or bearish direction.

The current move lower is set within a wider trend of higher lows and lower highs. This is the basic construct of a symmetrical triangle consolidation phase. As such, watch for a break through the first swing high of $1.2558, or swing low of $1.2418, as a gauge of where we go from here.

AUD/USD declines into wider 76.4% retracement level

AUD/USD has continued its declines, with the pair falling below the first swing-low of $0.6996. That points towards a wider retracement coming into play in a similar manner to that seen in early July.

The key question is whether the pair will respect the upcoming 76.4% retracement level at $0.6951. Should that occur then it looks like we are simply retracing before the pair creates another push higher. However, an easy break below $0.6951would raise the likeliness of a breakdown from this recent uptrend, with a break below $0.6910 providing confirmation of such a bearish shift in tone.

IGA, may distribute information/research produced by its respective foreign affiliates 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.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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.

Please see important Research Disclaimer.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.