Dollar weakens, giving EUR/USD and AUD/USD space to rally, while EUR/GBP edges lower
A risk-on morning has seen the Aussie and euro make headway against the US dollar.
EUR/USD rebound stalls
EUR/USD dropped back from Friday’s highs yesterday, and was unable to make further progress towards $1.06. However, the bearish view has yet to be fully revived, since the gains of the past few days are still relatively intact.
For the time being, the price continues to hold above the $1.0354 level, as it did in early May, avoiding any new lower low.
Jerome Powell’s testimony this week could provide further direction, depending on his view of monetary policy. Additional upside from current levels would head towards $1.0637, $1.0727 and then $1.0777.
EUR/GBP keeps climbing
EUR/GBP has continued to climb over the past two months, as the cautious outlook from the Bank of England (BoE) contrasts with the move towards rate increases by the European Central Bank (ECB), and the expectation that the policy response will have to be stepped up.
Trendline support has continued to underpin the pair since mid April, helping to prevent additional downside several times in May and June. In addition, a series of higher highs and higher lows remains in place. The most recent spike carried the price towards 87p, the highest level since quarter one (Q1) 2021.
A break below 85.40 would likely put the price below trendline support and signal that a bigger near-term pullback is at hand. Further gains from the current level would head towards 85.95 and then 86.58.
AUD/USD looks to move higher
AUD/USD dropped sharply on Friday, and then was unable to make much headway yesterday, remaining below $0.697. Even comments from the Reserve Bank of Australia (RBA) governor overnight relating to the expectation of further rate increases was unable to provide much of a bullish impetus for the pair.
Further gains above $0.697 would put $0.7007 into view, followed on by the highs last week around $0.705. From there the 50-day simple moving average (SMA) at $0.712 comes into view.
A break below rising trendline support from last week’s low, i.e. below $0.694, would mark a bearish move and put last week’s low at $0.685 back into play as possible support.
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