EUR/USD, GBP/USD and AUD/USD hit hard as the FOMC gear up for another rate hike
EUR/USD, GBP/USD and AUD/USD continue to suffer as the dollar dominate once again.
EUR/USD slumps as risk-off sentiment takes hold
EUR/USD has been hit hard over the beginning of this week, with the price falling back into a two-week low as Russia lays out plans to escalate the conflict with Ukraine. Meanwhile, the impending interest rate decisions from the US and UK provide the basis for greater uncertainty from the monetary policy perspective. That has brought about benefits for the dollar, as traders gear up for a potential jump in US rates this evening.
EUR/USD has subsequently been hit hard, with the price dropping through $0.9945 support to continue the wider bearish trend. A decline through $0.9864 would be particularly notable as it would draw a close to this latest period of consolidation and bring fresh multi-year lows. Until then, watch out for potential near-term consolidation, with a bearish outlook holding unless the price rises through $1.005 resistance.
GBP/USD breaks support to reach 37-year low
GBP/USD has been hit hard once again this week, with the price following up the recent break through the critical $1.1411 level to provide a fresh 37-year low. That signals a willingness to continue the downward trajectory, with further dollar weakness expected despite the impending Bank of England (BoE) rate decision. With markets pricing in a 70% chance that Bailey and co raise rates by 75 basis point (bp), that also raises questions over what happens if they underwhelm by moving by just 50bp.
In any case, it seems difficult to envisage a scenario where the pound can muster enough strength to fight back against the dollar at a time when risk-off sentiment continues to drive demand for the greenback. As such, any short-term rebound is seen as a selling opportunity, with a rise through the latest swing high of $1.146 required to bring about a wider rebound. In either case, bearish positions are favoured as the dollar looks set to go from strength to strength.
AUD/USD breaks through support to bring fresh two-year low
AUD/USD has similarly been on the back foot over the course of this week thus far, with the price falling into a fresh two-year low this morning. The existence of the wider bearish trend coupled with the more recent head and shoulders formation bring expectations of further downside to come. That has been playing out for all intents and purposes, with this latest break through $0.6681 support bringing expectations of further downside.
As such, further weakness looks likely here, with a rise through the $0.6747 level required to bring about a more positive short-term view. In any case, such upside would also be deemed a short-term rebound, with bears expected to dominate going forward.
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