EUR/USD, GBP/USD and AUD/USD gain from dollar weakness
EUR/USD, GBP/USD and AUD/USD expected to continue recent gains as the dollar comes under pressure.
EUR/USD rallies into critical resistance level
EUR/USD has continued its uptrend this week, with the price rising back into the crucial $1.1239 resistance level today. Despite the consolidation we have seen mid-week, the inability to break below $1.1096 ensured that we did not see a bearish signal for the pair.
With the price currently back at the peak from 31 December, a break through here would negate a multi-year downtrend for the pair. Much of this will come down to monetary policy shifts, with the European Central Bank (ECB) unable to make any notable adjustments compared with the significant amount of Federal Reserve (Fed) easing that is likely as we move through this health crisis. With that in mind, further upside does look likely, yet it makes sense to await a break through $1.1239 to bring about greater confidence that we will continue from here. As such, the reversal or break through this level will prove key in laying out the bias for the day ahead.
GBP/USD surge highlights dollar decline
GBP/USD has managed to surge beyond the 76.4% Fibonacci resistance level this week, in a move that points towards a likely end to the weakness seen over the past two months. Once again, the interest rate path of the Fed is likely to be highly accommodative compared with the Bank of England (BoE), and markets are responding.
With that in mind, further upside seems likely, with a rise through $1.3018 providing a bullish breakout signal and end to this recent downtrend. Until then, watch out for whether we get a response at the 200 simple moving average (SMA) level which is currently being challenged.
AUD/USD consolidation likely to resolve higher
AUD/USD has failed to capitalize on the dollar weakness story, with the price consolidating after hitting the 61.8% Fibonacci resistance level. Given the sharp move into this consolidation phase, there is likely to be another leg higher to come, with the price heading back towards the 76.4% level of $0.6694.
However, with the downtrend still intact, there is a chance we will see the pair turn lower. Ultimately, the Reserve Bank of Australia (RBA) is likely to take more action than the ECB or BoE, while the Chinese slowdown is also going to hit the Australian economy harder than most. With that in mind, the AUD is another currency alongside the dollar which is expected to remain under pressure. As such, we await a breakout from this consolidation to provide guidance on the next move, with a break through $0.6774 ultimately required to negate the wider bearish trend.
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