EUR/USD, GBP/USD and AUD/USD start to turn after recent rebound
EUR/USD, GBP/USD and AUD/USD look likely to head lower once again, with recent gains providing a potential opportunity for the bears to step back in.
EUR/USD consolidation likely to resolve downwards
EUR/USD has been largely consolidating over the past week, with the gains seen in the early part of the week giving way to a drift lower as we head towards the weekend. This daily timeframe highlights how the dollar has dominated over the course of 2022, with a clear downtrend bringing repeated revisits to trendline resistance. With the price having taken us back towards that line once again, there is a good chance we will see the pair weaken before long.
As such, while EUR/USD appears to be finding its feet currently, there is a good chance we see the bears reverse lower before long. With that in mind, a bearish reversal is expected, with a rise through the $1.0198 resistance level required to negate this bearish outlook.
GBP/USD reversing lower from trendline resistance
GBP/USD has seen selling pressure taking hold over the back end of the week, with the price having rallied back up into trendline resistance once again. With the UK finding itself without a leader once again, there is certainly some uncertainty over the direction of the country. However, it is worth noting that Kwarteng’s failings and Jeremy Hunt’s appointment does essentially guarantee that the government will follow a policy aimed at bringing down inflation rather than stimulating growth.
The wider trend does remain resolutely bearish, with expectations of higher interest rates and economic contraction likely to bring additional dollar strength. As such, further downside looks likely from here, with a push through $1.1738 required to bring about a more positive outlook.
AUD/USD weakens from prior support
AUD/USD has failed to muster much of a recovery of late, with the price only managing to rise into the prior swing low of $0.6363. Looking back at the consolidation around the beginning of the month, it does look remarkably similar to the price action we are currently seeking. With a clear bearish trend in play, and the Australian dollar expected to weaken as the Reserve Bank of Australia (RBA) raises rates at a significantly slower pace to the Federal Reserve (Fed), it is likely that we see another leg lower from here.
A break below $0.617 brings a confirmation signal that the next leg lower is starting. Meanwhile, a rise through $0.6363 would bring expectations of a deeper retracement of the $0.6547 selloff. However, until we break $0.6547 level, a bearish outlook remains in play.
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