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EUR/USD, GBP/USD, and AUD/USD on cusp of directional break

EUR/USD, GBP/USD and AUD/USD have been consolidating, with market direction changing on a weekly direction. However, we appear to be on the cusp of a directional break to set the forthcoming direction.

EUR/USD finds tentative support at Fibonacci level

EUR/USD declines have taken us into the 76.4% Fibonacci level ($1.0821) recently, with Friday seeing a sharp rise off that region. Despite the move lower in early trade today, there is a good chance that we have bottomed out for now. Looking at the price action over the past two months, there is a clear tightening in EUR/USD given the creation of lower highs and lower lows.

With that in mind, we would need to see a break from that pattern to give us a signal that this narrowing is set to end. A bullish break would necessitate a rise through $1.0991, while a drop below $1.076 would bring a bearish break. Given this creation of higher lows, there is a good chance we will turn higher from here, with the rise through $1.0878 providing a bullish signal. Watch for whether we manage to reverse higher from this region, with the price currently respecting the intraday 61.8% support level at $1.0843. Alternatively, a break back below the Friday low of $1.0812 would point towards a potential move to ultimately break below that key $1.076 low.

GBP/USD continues to consolidate after previous gains

GBP/USD has been in consolidation mode over the past few trading days, with the price largely rotating between the $1.2407 and $1.2516 levels.

The wider trend seen over the past month has been bullish, signaling the potential for an upside breakout from here. However, it makes sense to expect further consolidation until we see a breakout from this range.

AUD/USD reaching triangle apex

AUD/USD has also been consolidating recently, with the pair moving into the apex of a symmetrical triangle formation. This points towards a likely breakout in the near term, as we await a signal on the short-term direction of this pair.

Given the recent breakdown, and previous uptrend seen earlier this month, there are arguments on both sides. As such, it makes sense to await a breakout through $0.6314 or $0.6378 to bring about a signal for where we are likely to go from here.

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.

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