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EUR/USD and GBP/USD approach major lows while AUD/USD also slips

​Technical view on EUR/USD, GBP/USD and AUD/USD as US dollar benefits from safe haven flows as Gazprom shuts off gas supplies.

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​​EUR/USD trades in 20-year lows

EUR/USD trades in 20-year lows, having slipped through the 99 cents level early on Monday, on the back off Gazprom indefinitely shutting down the Nordstream 1 pipeline on Friday and as the European Union (EU) worries about a deepening energy crisis and prepares to discuss ‘radical energy intervention tools’ when it meets this Friday. 

The cross remains in a clear downtrend, having slid over the past three consecutive months, and seems to be heading down towards the $0.9698 to $0.9593 support area which is comprised of the June 2000 and February 2001 highs and the September 2002 low.

Minor resistance for the currency pair sits between the minor psychological $1.00 mark and the one-month downtrend line at $1.0018. From a medium-term technical perspective, the cross remains bearish while it stays below its late August high at $1.0089. Intraday minor resistance can be spotted at Friday’s $0.9945 low.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

GBP/USD drops towards Covid low

GBP/USD is in free fall as Gazprom indefinitely cut off gas supplies through the Nordstream 1 pipeline to Europe on Friday, citing an oil leak in a turbine, hours after G7 leaders agreed to impose a price cap on Russian oil.

Even though the UK only imports about 4% of its gas from Russia, it still has to purchase its gas on the international market. With the European gas futures benchmark TTF surging by nearly 30% on Monday, the British pound has also been detrimentally affected by the deepening energy crisis, pushing it lower, especially against the US dollar which once more acts as a safe haven.

The cross has accelerated its descent from its June 2021 peak at $1.4249 and is now within reach of its March 2020 Covid-19 low at $1.1412, a near 20% drop. It has been trading in a downtrend channel for the past month, the upper resistance line of which comes in at $1.1692.

GBP/USD chart Source: IT-Finance.com
GBP/USD chart Source: IT-Finance.com

AUD/USD continues its slide ahead of RBA meeting

AUD/USD's descent from its $0.7136 mid-August high is ongoing with the cross heading towards the $0.6682 July trough while investors look ahead to Tuesday’s Reserve Bank of Australia (RBA) meeting for which a 50-basis point (bps) rate hike to 2.35% is priced in.

A drop and daily chart close below the current September low at $0.6772 would engage the early July low at $0.6762 below which sits the July low at $0.6682. 

​Technically speaking as long as the currency pair remains below Friday’s high at $0.6855, a downside bias remains in play.

AUD/USD chart Source: IT-Finance.com
AUD/USD chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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