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EUR/USD and AUD/USD drift lower, while GBP/USD consolidates

EUR/USD and AUD/USD continue to lose ground, while political volatility has driven GBP/USD consolidation.

EUR/USD continues to drift lower after head and shoulders breakdown

EUR/USD managed to complete a head and shoulders formation on Tuesday, with the break below $1.181 bringing about a sharp decline for the pair.

We have since seen substantial EUR/USD losses in anticipation of a potential rate cut from the European Central Bank (ECB) today. Given the uncertainty of that event, volatility looks certain. For the near term, a break through the recent swing high of $1.1156 would bring about a signal that we could start to retrace that recent sell-off from $1.1282. Otherwise, a bearish outlook remains in play as the pair continues to create lower intraday highs.

GBP/USD consolidation continues amid uncertain political outlook

The pound has seen a volatile week, with the GBP/USD showing little preference for a bullish or bearish direction.

The current move lower is set within a wider trend of higher lows and lower highs. This is the basic construct of a symmetrical triangle consolidation phase. As such, watch for a break through the first swing high of $1.2558, or swing low of $1.2418, as a gauge of where we go from here.

AUD/USD declines into wider 76.4% retracement level

AUD/USD has continued its declines, with the pair falling below the first swing-low of $0.6996. That points towards a wider retracement coming into play in a similar manner to that seen in early July.

The key question is whether the pair will respect the upcoming 76.4% retracement level at $0.6951. Should that occur then it looks like we are simply retracing before the pair creates another push higher. However, an easy break below $0.6951 would raise the likeliness of a breakdown from this recent uptrend, with a break below $0.6910 providing confirmation of such a bearish shift in tone.

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