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

The dollar continues to flounder against the euro and sterling, yet with AUD/USD turning lower, could the Aussie be set for a period of weakness?

Euro and US dollar notes
Source: Bloomberg

EUR/USD to retrace from key resistance?

EUR/USD is moving lower this morning, following on from a rally into the February high of $1.0829. That level is going to be crucial in determining whether we are set for a more protracted move higher. However, for now it looks like we could start to retrace some of this week’s gains, with an hourly close below $1.0775 pointing towards a deeper pullback.

It is worth noting that while the short-term trend remains firmly bullish, the fact we are seeing a pullback from a key resistance level means it makes more sense to either get long a break through $1.0829, or short a move back below $1.0719. Until then, we are in discovery mode.

GBP/USD retracement could give further upside

GBP/USD has similarly gained in the face of a weaker dollar this week, with overnight price action taking the pair into a March high. The next major historical resistance level of note is $1.2561, and until then it looks like it is worth sticking with the trend. As such, pullbacks are seen as buying opportunities, unless we break the previous low of $1.2424.

AUD/USD reverses from key resistance zone

AUD/USD has shown its true colours this week, with the pair failing to break through the crucial trendline and horizontal resistance at $0.7740. The creation of lower highs and lower lows points towards further losses, where a bearish outlook is in place unless we see a push back through $0.7685.

Given that we are seeing this move despite dollar weakness across the board, it makes sense that a return to dollar strength could see selling ramped up heavily. Follow events in Washington (Trump’s healthcare bill) very carefully.

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