EUR/USD, GBP/USD and AUD/USD expected to decline despite recent rise
EUR/USD, GBP/USD and AUD/USD look likely to falter once more, despite recent gains.
EUR/USD turning lower from Fibonacci resistance
EUR/USD has started to weaken once again this morning, following a rally in to the 76.4% Fibonacci retracement level at $1.0048. The rise we have seen since Monday's low looks to be a retracement following a breakdown caused by Jerome Powell’s Jackson Hole appearance.
While the euro could find support based on the notion that the European Central Bank (ECB) are increasingly expected to raise rates by an oversized 75 basis points (bps), the wider risk off sentiment looks likely to ensure that the dollar dominates this currency pair. As such this latest retracement looks like a selling opportunity with a rise through $1.009 required to negate that bearish outlook.
GBP/USD turns lower as bearish trend looks set to continue
GBP/USD looks set to break into a fresh two-year low today with overnight gains simply taking us back into descending trend line resistance. Despite rising inflation levels bringing expectations of ever higher rates at the Bank of England (BoE), we are expecting a relatively similar trajectory for the US.
As such, the focus lies squarely on risk attitudes with markets turning lower to the benefit of the US dollar. With that in mind, a bearish outlook holds for this pair, where rise up through the latest swing high of $1.176 would be required to bring a more neutral tone.
AUD/USD head and shoulders formation could bring significant downside
AUD/USD have been attempting to regain ground once again followed following a decline into Mondays lows. This week started with a gap lower and a decline which took the price through support to complete a bearish head and shoulders formation.
However, we are yet to see a convincing follow through on that break with a decline through $0.6841 required to provide markets with the signal that this consolidation phase is over. The continued creation of lower highs does signal expectations for such a break lower with a rise up through $0.6956 required to negate the bearish outlook that is currently in place.
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