Euro, sterling and Aussie retreat against the dollar
The strong dollar is once again putting pressure on EUR/USD, GBP/USD and AUD/USD.
EUR/USD heads lower
EUR/USD has come under fresh pressure as the dollar strengthens once more. The dovish view of Wednesday’s Federal Reserve (Fed) decision has been reversed and now markets are firmly convinced of the Federal Open Market Committee's (FOMC’s) hawkishness.
As a result, we can expect additional downside here, with last week’s lows just above $1.04 likely to be tested, setting the stage for additional declines if this low is breached. Admittedly the price looks stretched to the downside, but even a rally back towards $1.09 leaves the downtrend firmly intact.
GBP/USD slumps in wake of BoE meeting
The Bank of England (BoE) raised rates yesterday, and expect inflation to reach 10% by the end of the year, but their outlook on the UK economy was so gloomy that the pound fell once again. Indeed, the Monetary Policy Committee (MPC) might be close to pausing their hiking given the slashing of growth forecasts for 2023 and 2024.
The news sent the pound slumping against the dollar, pushing it back below $1.24 for the first time in two years. The area around $1.215 becomes the next big zone to watch for support. As with the euro versus the dollar, GBP/USD is in some sense ‘due’ for a rebound, which could carry it as far as $1.3, but for now the dollar is firmly in control here.
AUD/USD reverses gains from RBA hike
The bounce that seemed so strong here with AUD/USD earlier in the week in the wake of the Reserve Bank of Australia's (RBA’s) rate hike has now almost entirely disappeared. Like most other risk assets, yesterday the Aussie endured a dramatic pullback.
The week’s lows at $0.704 now come into view, and then below this the big zone of support on AUD/USD around $0.7 comes into view. This area has held since the final months of 2020, so a drop below here reinforces the bearish view significantly. For a more bullish view to emerge the price needs to recover $0.72.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
