EUR/USD, GBP/USD and AUD/USD rebound unlikely to last
EUR/USD, GBP/USD and AUD/USD see near-term gains after a volatile US CPI reading, but wider bearish trends point towards potential bearish reversals before long.
EUR/USD volatility resolves in a push higher
EUR/USD has started to reverse upwards after a day of major volatility which saw US core inflation reach a 40-year high of 6.6%. Nonetheless, while we initially saw the price drop back into the 76.4% Fibonacci support level, we have resolved with a risk-on move that is driving EUR/USD upwards.
Crucially, that move has brought the price up through the $0.9774 resistance level, ending the intraday trend of lower highs. Subsequently, we turn towards the wider trend, with a descending trendline built over the course of 2022 providing a potential upside target.
With the ongoing pattern of lower highs evident here, short-term upside looks to provide a potential selling opportunity. That view would be negated with a push up through the trendline and $1.00 handle. Potential points of reversal are provided by the Fibonacci tool, with $0.9815, $0.9859 and $0.9913 in view.
GBP/USD rebound takes the price back into trendline resistance
GBP/USD has been on the rise since yesterday’s consumer price index (CPI) fuelled volatility, with the price rising back towards a key confluence of resistance. The descending trendline and 76.4% Fibonacci resistance level point towards a potential swift bearish reversal if the ongoing trend of lower highs is to continue.
With Kwasi Kwarteng expected to return to the UK early to discuss further potential budget U-turns, we may yet see another boost for the pound.
Nonetheless, unless the price rises through the $1.1495 swing high, there is a good chance that the price soon reverses downwards to continue the trend of lower highs evident over recent months.
AUD/USD rallies into key resistance zone
AUD/USD similarly found a bid yesterday, with soaring underlying inflation in the US signalling a likely continuation of the Federal Reserve (Fed) tightening planned over the coming months. Meanwhile, the latest 25-basis point (bp) hike from the Reserve Bank of Australia (RBA) signal a far slower pace of tightening in Australia.
This explains the relative underperformance we are seeing here, with the price still far from the major swing high of $0.6547. Instead, we have seen the price rise back into the intraday swing high of $0.6346, which also tallies up with the late-September low of $0.6363.
A break up through that zone of resistance would bring a wider rebound into play. However, until that happens, there is a good chance we see the price reverse lower from this resistance zone.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
