EUR/USD, GBP/USD and AUD/USD head lower as the dollar dominates
The dollar has found its feet once again, with EUR/USD, GBP/USD and AUD/USD all reversing lower after months of gains.
EUR/USD falls back towards Fibonacci support
EUR/USD has been losing traction as the dollar comes back into prominence this week. Coming in the wake of a producer price index (PPI) inflation reading that saw the fastest monthly growth in seven-months, we are seeing concerns emerge over how sticky inflation could soon enough see the price declines come to a halt.
Whether that occurs or not remains to be seen, but there are clear concerns that are driving the dollar higher. For EUR/USD, we can see that the wider uptrend could come back into play here, with the price approaching the 76.4% Fibonacci retracement of the $1.0483 to $1.1033 rally.
A move that respects that $1.0613 level would bring greater confidence that we are going to see the pair turn higher. However, a move through that Fibonacci support level would signal the potential for a wider bearish phase to come into play.
GBP/USD collapse continues despite improved retail sales figure
GBP/USD has been hit hard since the recent inflation figure that showed a quickening in the pace of disinflation. That ability to drive down inflation is going to be key for a country that has been widely predicted to have a particularly difficult 2023.
With markets expecting to see the Bank of England (BoE) swiftly reverse course on rates once inflation has been brought under control, the recent consumer price index (CPI) data highlights why GBP has been hit hard. Today has seen a welcome 0.5% rise in monthly UK retail sales, although this has done little to lift the pound. Instead, we have seen a push through 76.4% Fibonacci support following a 61.8% rebound that topped out on Tuesday.
The current sell-off looks likely to take the price through $1.1841, which would complete a bearish double top formation. Thus, keep an eye out for such a break given the bearish implications, while a rise through the recent peak of $1.227 required to signal a more positive picture for the pair.
AUD/USD looks to have topped out after recent declines
AUD/USD appears to be ahead of the curve here, with the pair falling into a fresh five-week low this morning.
That comes off the back of an appearance from Reserve Bank of Australia (RBA) Governor Lowe, who stated that whilst further hikes be necessary, they hope to start cutting rates in 2024.Something for everyone there. In any case, the dollar dominance appears to be playing out heavily here, with the move through $0.6855 signalling expectations of further downside.
A move up through the recent swing-high of $0.6936 would ease this bearish sentiment somewhat, but bearish positions are favoured until then.
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