FX levels to watch: EUR/USD, GBP/USD and AUD/USD
A sharp bounce for the dollar has sent EUR/USD, GBP/USD and AUD/USD lower. However, we are starting to see signs of a rebound to claw back some of yesterday’s move.
EUR/USD rally looks to be over
EUR/USD sold off sharply yesterday, following on the Federal Open Market Committee (FOMC) rate decision. This looks likely to mark the end of the recent rebound, with the wider bearish picture coming back into play. That rebound took us into the zone between the 61.8% and 76.4% retracement levels, with the rising wedge formation ultimately breaking in the expected direction.
We have also seen a break below the closest swing low ($1.1197), bringing about greater confidence that this is the beginning of a more bearish phase. With all that in mind, further downside looks likely before long. A break below yesterday’s low of $1.1187 would bring about a more immediate bearish picture. Until then, we could see a more significant retracement of yesterday’s sharp decline before we turn lower once again. A break through the $1.1265 level would be required to bring a wider bullish outlook.
GBP/USD turning higher once more ahead of BoE
GBP/USD has been regaining ground this week, with a break through trendline resistance being followed up by subsequent gains. Despite yesterday’s sell-off, we are seeing the pair turn higher once more today, as it heads towards a key resistance level.
The $1.3133 level is going to be key for this pair, with a break above that level providing us with a wider bullish picture. For the shorter term, watch for a break through $1.3103 to raise expectations of a challenge of that $1.3133 level. Alternately, a break below $1.23037 would signal a more bearish picture coming into play.
AUD/USD rebounds after sharp decline
AUD/USD saw a sharp decline yesterday, bringing the pair into the 76.4% Fibonacci retracement support level.
We are currently seeing a rebound from that support level and thus there is a good chance we will see further upside over the short term. A break through $0.707 would be required to bring about a wider bullish picture. On the flip side, a break back below $0.7007 would heighten the bearish picture once more.
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