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

With the dollar index posting a fifth consecutive day of gains, it is clear the greenback is coming back into favour. With EUR/USD, GBP/USD and NZD/USD all gaining ground overnight, will this simply provide an opportunity to go short once more? 

Euro and US dollar notes
Source: Bloomberg

EUR/USD downside looks set to continue

Yesterday’s late bounce in EUR/USD failed to hold, with price subsequently tumbling once more. Crucially, this takes us back to the historically significant $1.0525 support level, which will be a key hurdle to overcome for further losses to come to the fore.

An hourly close below yesterday’s low of $1.0514 would be very telling here, as that would not only necessitate a break through $1.0525, but also would continue the downtrend instigated earlier in the week. Alternately, an hourly close above $1.0571 would portray a market that could go into a recovery phase. Until then, a continuation of the downtrend remains the preferred option for this pair. 

GBP/USD bounce looks to be short term

GBP/USD has tumbled below $1.2347, thus completing a major topping pattern for the pair. Crucially we have moved into the $1.2253-$1.2261 support zone (mid-January lows), which is a hurdle to overcome for further losses.

Current upside looks unlikely to last here, with any rallies into the $1.2347 resistance zone likely to be sold into. As such, unless we create a new higher high, short-term gains are expected to be sold into. 

NZD/USD sell-off expected to persist

NZD/USD has been selling off sharply throughout February so far, with yesterday’s break below $0.7130 providing yet another bearish signal. The subsequent rally into the 50% retracement overnight looks like it will resolve downwards once more.

An hourly close below $0.7100 would confirm this retracement is finished and another leg lower is upon us. Until then, as long as price remains below $0.7237, a bearish outlook remains in play for this pair. 

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