FX levels to watch – EUR/USD, GBP/USD, AUD/USD

With Trump due to move into the Whitehouse, the dollar comes into focus after a mixed week. With AUD/USD and GBP/USD starting to look bullish, are we due a period of weakness for the greenback?

Euro and dollar notes
Source: Bloomberg

EUR/USD retraces wedge selloff

EUR/USD has rallied into the 76.4% retracement following a wedge breakdown earlier in the week. The wedge pattern itself was bearish by nature and the follow up provided a somewhat bearish view. The only worry was that we did not see the $1.0579 support level broken in the follow up and this takes some of the confidence away from the trend reversal.

Price has since rallied into a deep pullback and is turning lower, which brings about a good chance of a downside move. As such, while a bearish view is in place, the additional confidence that would have been afforded by a break below $1.0579 is not there.

GBP/USD bounces from trendline support

GBP/USD has managed to bounce up from a notable trendline support earlier in the week, with the pair showing signs of a resurgence following Theresa May’s speech on Tuesday. We have seen the pair move higher overnight and this is expected to continue over the short term.

We are still in the infancy of this recovery and as such, the confidence that we are bottoming out is lessened. A break through $1.2433 would be required to gain further confidence that the current rally has legs. Conversely, a break back below $1.2253 would provide a more neutral view.

AUD/USD falling into trendline and fib support

AUD/USD has managed to break through the crucial $0.7525 resistance level this week, bringing with a more bullish outlook for the pair. We are seeing a pullback towards a confluence of that $0.7525 level, the 76.4% retracement ($0.7516) and an ascending trendline ($0.7507), which should provide another leg higher for the pair. A bullish outlook remains in place unless we see an hourly close below $0.7493.

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