EUR/USD, GBP/USD and AUD/USD likely to fall further
EUR/USD, GBP/USD and AUD/USD expected to continue their declines irrespective of short-term upside.
EUR/USD rises back towards the 61.8% Fibonacci retracement
EUR/USD managed to rise back up towards the 61.8% Fibonacci retracement at $1.0087 yesterday, with the price continuing its grind higher as traders price in the increasingly likely chance of a 75 basis points (bps) rate hike from the European Central Bank (ECB).
This morning has seen an improved German retail sales number, while eyes turn towards purchasing managers index (PMI) and unemployment data released throughout this morning. The current rally looks to represent a retracement of the $1.0203 to $0.99 sell-off.
However, while we could still see further short-term upside, this phase is likely to represent a temporary move in anticipation of another bearish turn. That bearish view remains in place until we see the price break up through the notable $1.0203 swing high. To the downside, a decline through $0.9971 would signal the beginning of the next leg lower.
GBP/USD falls into fresh two-year low
GBP/USD remains on the back foot with the price having dropped through support to create yet another two-year low.
While the focus has been on the Federal Reserve (Fed) and ECB given recent commentary guiding expectations for an oversized policy response, the lack of commentary from the Bank of England (BoE) has led to underperformance for the pound.
With the price trading below trendline resistance, any short-term upside is likely to be stifled once again. A rise through $1.1694 would be required to bring a wider retracement into play. Until then, any gains look likely to be short lived in nature.
AUD/USD head and shoulders formation back into play
AUD/USD have managed to break back down through head and shoulders support in a more convincing manner, with the price dipping below the $0.68 handle this morning.
That head and shoulders formation coincides with a long-term bearish trend for this market, combining to provide greater conviction of near-term downside.
As such, while we are seeing some gains this morning, such a rebound it is likely to be short term in nature. Thus, shorts continue to be favoured unless the price rises up through the latest swing high of $0.6904.
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