EUR/USD, GBP/USD and AUD/USD reverse lower after recent rebound
EUR/USD, GBP/USD and AUD/USD reverse lower as the dollar comes back into prominence.
EUR/USD rolling over as dollar starts to come back into strength
EUR/USD has been on the back foot since the Tuesday rise into parity, with the bears coming back into prominence as markets start to roll over once again. The long-term trajectory evident over the course of this year brings a clear bearish bias, and thus the weakness we are seeing from here plays into that negative view. Meanwhile, commentary from the Federal Reserve (Fed) members highlight the expectation that they will continue to remain steadfast on their push to drive down inflation via rate increases.
Today brings a fresh update from the US jobs market, with traders keeping a close eye out for any pick up in earnings growth and unemployment. With the dollar coming back into prominence, the bearish trend is expected to continue here, with the wider downtrend on broken in the event that the price breaks up through the $1.0198 swing high. Until then, bearish trades are favoured, with the price expected to continue this downward trajectory as we move forward.
GBP/USD starts to weaken after period of strength
GBP/USD is also on the back foot as we head towards the weekend, with dollar dominance once again looking likely to take hold. The recovery of the post-budget slump has provided some relief from feelings that the pair could be in freefall on concerns of fiscal stability. However, irrespective of the impact played by the budget, the wider bearish trajectory remains in play as traders prefer the haven dollar.
With that in mind, another leg lower is favoured here, with the bearish reversal in the stochastics giving us a fresh sell signal after moving below the 80 threshold. This bearish outlook holds unless we see the price rise through the $1.2277 level.
AUD/USD heads lower, with the price closing in on two-year low
AUD/USD has lagged many of its peers of late, with the price failing to provide the kind of rebound we have seen for EUR/USD and GBP/USD last week. With the Reserve Bank of Australia (RBA) having raised rates by just 25 basis points (bp) this week, it is clear that the pace of tightening in Australia is significantly less rapid than at the Federal Open Market Committee (FOMC). We are now seeing the pair head lower, with the price approaching the $0.6363 low established last Wednesday.
A break below that level would provide a fresh sell signal, with stops subsequently placed above the recent retracement high of $0.6547. As such, for today the key question is whether we see the price break that 0.6363 low to set a fresh two-year low.
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