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

BoE day has arrived, with the potential for significant volatility in sterling crosses. In addition, some of this may spill over to euro pairs depending on the actions taken by Mark Carney and his team.

Sterling and US dollar currencies
Source: Bloomberg

GBP/USD caught in a bearish trend

July’s tale has been replicated in August, namely that $1.34 continues to be too much of a barrier for upside progress here. The pair remains stuck in a bearish trend, with little sign that a real upward move is on the cards – today’s Bank of England meeting has certainly stayed the hand of sterling bulls, with the ongoing tide of negative data not helping matters.

A significant dovish shift on the MPC today might see the pair head down towards $1.32, and then on to possible support around $1.3050. 

EUR/USD weakness looks to bring out the buyers

The pair has yet to regain the heights seen earlier in the year at $1.15, and yesterday’s sharp reversal suggests a period of USD strength may be in the offing. As a result we could see a move back to the 200-day simple moving average ($1.1078), and then perhaps down to the late-July low around $1.0950.

Nevertheless, buying the dips has been the approach to take here since February, with sustained weakness likely to bring out fresh buyers. 

AUD/USD gains stall

AUD/USD gains have stalled since late June around $0.76, with the past few days repeating that pattern. Nonetheless, for now the uptrend goes on, so weakness back in the direction of $0.74 could see fresh buyers emerge.

There is a clear amount of resistance from $0.76 to $0.77, with a break above the latter potentially heading towards the mid-April highs at $0.7850. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.