Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.

EUR/USD, EUR/GBP and AUD/USD lower on hawkish Fed remarks

EUR/USD and AUD/USD took a hit as the US Dollar appreciated after Fed Chair Jerome Powell hinted at a 50-basis point rate hike in May with EUR/GBP recovering amid weak UK data.

EUR/USD gives back recent gains on Fed Chair’s hawkish remarks

EUR/USD’s rally off last week’s low at $1.0758 has taken the cross to the minor $1.0933 to $1.0945 resistance zone which provoked failure yesterday as hawkish US Federal Reserve (Fed) comments pushed the US Dollar higher.

Invited to a panel hosted by the International Monetary Fund (IMF), Fed Chair Jerome Powell said a 50-basis point (bp) rate increase was “on the table” for May and reiterated that Fed officials were committed to “front-end loading” inflation-fighting efforts.

The 8 April low at $1.0837 has thus been revisited, below which lies key support at the mid-April trough at $1.0758. If slid through, the April 2020 low at $1.0727 would be eyed and then the March 2020 low at $1.0638. Only a currently unexpected advance above the $1.0933 to $1.0945 late March low and 6, 7, 11 and 21 April highs would have bullish implications and put the February-to-April resistance line at $1.1043 on the map.

EUR/GBP capped by the 55-day simple moving average (SMA) at £0.8358

EUR/GBP’s bounce off last week’s £0.825 low has taken the cross to the 55-day SMA at £0.8358, before it faltered.

With UK Consumer Confidence falling to its lowest level since 2008 and UK retail sales in March dropping by 1.4%, much worse than the anticipated 0.3% decline, the currency pair is heading back up again, though.

Above yesterday’s high at £0.8367 the 11 April peak can be found at £0.838, a rise above which would change the short-term outlook back to being bullish. Minor support sits at the 28 March low at £0.8322 and also at the 8 April low at £0.8308 with further potential support seen at the 23 March £0.8296 low.

AUD/USD falls through three-month uptrend line

AUD/USD continues its descent from its early April high at $0.7661 and has now slid through the three-month uptrend line at $0.7338, driven by hawkish comments from the Fed Chair Jerome Powell hinting that a half-point rate hike was likely to be seen next month and saying that a recession in the US was difficult to avoid.

The 23 February high at $0.7284 is now in focus, below which another potential downside target can be spotted at the 10 February high at $0.7249.

Minor resistance above the breached uptrend line is seen at the 18 April $0.7343 low and also at the 22 March trough at $0.7376. While no rise above the next higher 21 April $0.7458 high ensues, the April downtrend will remain intact.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

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