EUR/USD and GBP/USD approach major lows while AUD/USD also slips
Technical view on EUR/USD, GBP/USD and AUD/USD as US dollar benefits from safe haven flows as Gazprom shuts off gas supplies.
EUR/USD trades in 20-year lows
EUR/USD trades in 20-year lows, having slipped through the 99 cents level early on Monday, on the back off Gazprom indefinitely shutting down the Nordstream 1 pipeline on Friday and as the European Union (EU) worries about a deepening energy crisis and prepares to discuss ‘radical energy intervention tools’ when it meets this Friday.
The cross remains in a clear downtrend, having slid over the past three consecutive months, and seems to be heading down towards the $0.9698 to $0.9593 support area which is comprised of the June 2000 and February 2001 highs and the September 2002 low.
Minor resistance for the currency pair sits between the minor psychological $1.00 mark and the one-month downtrend line at $1.0018. From a medium-term technical perspective, the cross remains bearish while it stays below its late August high at $1.0089. Intraday minor resistance can be spotted at Friday’s $0.9945 low.
GBP/USD drops towards Covid low
GBP/USD is in free fall as Gazprom indefinitely cut off gas supplies through the Nordstream 1 pipeline to Europe on Friday, citing an oil leak in a turbine, hours after G7 leaders agreed to impose a price cap on Russian oil.
Even though the UK only imports about 4% of its gas from Russia, it still has to purchase its gas on the international market. With the European gas futures benchmark TTF surging by nearly 30% on Monday, the British pound has also been detrimentally affected by the deepening energy crisis, pushing it lower, especially against the US dollar which once more acts as a safe haven.
The cross has accelerated its descent from its June 2021 peak at $1.4249 and is now within reach of its March 2020 Covid-19 low at $1.1412, a near 20% drop. It has been trading in a downtrend channel for the past month, the upper resistance line of which comes in at $1.1692.
AUD/USD continues its slide ahead of RBA meeting
AUD/USD's descent from its $0.7136 mid-August high is ongoing with the cross heading towards the $0.6682 July trough while investors look ahead to Tuesday’s Reserve Bank of Australia (RBA) meeting for which a 50-basis point (bps) rate hike to 2.35% is priced in.
A drop and daily chart close below the current September low at $0.6772 would engage the early July low at $0.6762 below which sits the July low at $0.6682.
Technically speaking as long as the currency pair remains below Friday’s high at $0.6855, a downside bias remains in play.
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