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

European currencies have turned lower in the wake of yesterday’s ECB meeting, with further downside looking likely before long.

EUR/USD regaining strength following sharp sell-off

EUR/USD managed to tumble sharply from the key resistance level of $1.1774 yesterday, bringing the price below $1.1654. That break below near-term support raises the likeliness of a further drop, towards the bottom boundaries of this symmetrical triangle formation.

A break through $1.1774 (bullish) or $1.1574 (bearish) would dictate where the breakout from this pattern will go. Until then, it makes sense to play the triangle. In the near term, there is a good chance we will see some form of rebound to retrace some of yesterday’s losses.

GBP/USD pullback slows for now

GBP/USD also turned lower perfectly yesterday, respecting the 76.4% Fibonacci retracement and the 200-day simple moving average (SMA) on the four-hour chart. This points towards a continuation of the wider downtrend. However, confirmation would come with a break below the $1.3071 swing low.

Until then, the recent trend of higher lows and higher highs remains relevant, hence the chance of a rebound from here. But, given the wider trend and respect of the 76.4% retracement, there is a good chance any such rebound would be short-term in nature before the pair rolls over once again. A break above $1.3293 would negate this bearish outlook.

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