EUR/USD and AUD/USD rally while EUR/GBP drops on fifth consecutive day

EUR/USD recovers as Fed raises rates by 75bps

EUR/USD trades back around the $1.02 mark, having recovered from Wednesday’s $1.0097 low after the Federal Reserve’s (Fed) fourth consecutive rate hike by 75 basis points (bps) and as the Fed Chair Jerome Powell said it will become appropriate to slow the pace of increases depending on the inflationary and economic outlook.

Resistance for the cross sits between Monday’s and last week’s high at $1.0258 to $1.0278 and minor support between the mid-August high and Friday’s low at $1.013 to $1.0122 as well as at Wednesday’s $1.0097 trough.

Significant resistance above $1.0278 can be found in the $1.034 to $1.036 zone, which consists of the December 2016 and January 2017 as well as the May and June 2022 lows. Were a renewed descent to take the cross below $1.0097, parity would be back in focus. Below it, the current July trough lies at $0.9952. Failure there would engage the $0.9698 to $0.9593 support area, which is comprised of the June 2000 and February 2001 highs and the September 2002 low.

EUR/GBP trades in near four-month lows

EUR/GBP continues to swiftly come off last week’s high at £0.8584 as Russia reduced the gas supply through the Nord Stream 1 pipeline to 20% and German recession fears increased as German Gfk consumer confidence fell to an all-time low.

The currency pair is dropping for its fifth consecutive day and is fast approaching the May low at £0.8367, a drop through which could lead to the February and late March lows at £0.8307 to £0.8296 being revisited.

Minor resistance above the £0.8403 mid-July low can be seen along the 200-day simple moving average (SMA) at £0.8444. While remaining below it, the cross is considered to be bearish.

AUD/USD has broken through its downtrend line and eyes $0.7069

AUD/USD's rally from its $0.6682 mid-July low has twice taken it to its April-to-July downtrend line, once last week and again earlier on Tuesday on the back of rising oil prices, but twice failed to break through it before successfully doing so on Wednesday after the Fed’s 75bps rate hike.

Disappointing Australian retail sales, which showed the slowest rate of sales growth since January at 0.2% in June versus 0.9% in May, have slowed the rate of ascent in the currency pair. Nonetheless, the trendline break has been validated with the mid-June high at $0.7069 being targeted.

Slips should find support between the breached downtrend line and the two-week support line at $0.6939.