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.

Euro, sterling and Aussie retreat against the dollar

The strong dollar is once again putting pressure on EUR/USD, GBP/USD and AUD/USD.

EUR/USD heads lower

EUR/USD has come under fresh pressure as the dollar strengthens once more. The dovish view of Wednesday’s Federal Reserve (Fed) decision has been reversed and now markets are firmly convinced of the Federal Open Market Committee's (FOMC’s) hawkishness.

As a result, we can expect additional downside here, with last week’s lows just above $1.04 likely to be tested, setting the stage for additional declines if this low is breached. Admittedly the price looks stretched to the downside, but even a rally back towards $1.09 leaves the downtrend firmly intact.

GBP/USD slumps in wake of BoE meeting

The Bank of England (BoE) raised rates yesterday, and expect inflation to reach 10% by the end of the year, but their outlook on the UK economy was so gloomy that the pound fell once again. Indeed, the Monetary Policy Committee (MPC) might be close to pausing their hiking given the slashing of growth forecasts for 2023 and 2024.

The news sent the pound slumping against the dollar, pushing it back below $1.24 for the first time in two years. The area around $1.215 becomes the next big zone to watch for support. As with the euro versus the dollar, GBP/USD is in some sense ‘due’ for a rebound, which could carry it as far as $1.3, but for now the dollar is firmly in control here.

AUD/USD reverses gains from RBA hike

The bounce that seemed so strong here with AUD/USD earlier in the week in the wake of the Reserve Bank of Australia's (RBA’s) rate hike has now almost entirely disappeared. Like most other risk assets, yesterday the Aussie endured a dramatic pullback.

The week’s lows at $0.704 now come into view, and then below this the big zone of support on AUD/USD around $0.7 comes into view. This area has held since the final months of 2020, so a drop below here reinforces the bearish view significantly. For a more bullish view to emerge the price needs to recover $0.72.

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.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.8 pips on EUR/USD
  • Analyze market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on the most popular forex markets

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading forex provider.

Stay on top of upcoming market-moving events with our customisable economic calendar.