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

The dollar looks likely to come back into strength, to build off initial downside seen in EUR/USD, GBP/USD, and AUD/USD in order to reverse the countertrend gains seen over the past week. 

Source: Bloomberg

EUR/USD weakness likely to continue

EUR/USD has started selling off over the past two days, following on from a deep retracement into the zone between the 61.8% and 76.4% Fibonacci retracements.

The rebound we have seen overnight brings the pair into a smaller 76.4% retracement around $1.1576, which could provide us with the next leg lower today. A break above $1.1591 would point towards another wider rebound for the pair, at which point we would be looking at the $1.1641 Fibonacci resistance level. However, for now this recent downside move looks likely to persist.

GBP/USD sell-off begins to take hold once more

GBP/USD has also managed to reverse lower, with the recent retracement looking to unfold into yet another leg lower for the pair.

While we are seeing some strength come back into play this morning, it is unlikely to last. This rebound is thus seen as a retracement before we turn lower once more. A break above the $1.2937 mark would point towards a wider retracement.

AUD/USD consolidating after overnight rebound

AUD/USD rebounded in the wake of a political reshuffle which saw the Australian Prime Minister Malcolm Turnbull ousted by Scott Morrison.

That being said, this rebound is unlikely to last long, and thus a bearish outlook remains in play for the near term. Whether we will respect the $0.7302 swing high, or else the wider $0.7382 level remains to be seen. However, at some point between here and that wider $0.7382 point, it is likely that this pair will break lower to head into the $0.7202 low from last week. 

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