European currencies suffered at the hands of the US dollar on Friday, with both EUR/USD and GBP/USD selling off sharply to confirm our medium-term expectations. However, AUD/USD is seeking a different pathway, with the pair seemingly heading for a strong week.
EUR/USD in recovery mode following sell-offFriday’s break below the key $1.1219 support level provided us with a renewed bearish outlook inEUR/USD, with the pair breaking below a key trendline support. The current resurgence is unlikely to last, yet the depth of this rally is of course uncertain.
With that in mind, it either makes sense to await a more developed formation to sell into, or else await an hourly close below $1.1149. The key requirement for the bearish short-term view to also reflect a medium-term bearish confirmation comes with a break and hold below $1.1123.
GBP/USD rallies into key resistanceGBP/USD has similarly been gaining ground this morning, following on from a sharp deterioration on Friday. Price is currently trying to break through the key $1.3059 resistance level, following a bounce from the 76.4% retracement of the August low to September high.
Once more, the short-term price action has come back in tune with the medium-term outlook, yet there is a chance we could see further gains as the pair recovers some of the significant losses from Friday. With that in mind, it makes sense to either await a deep retracement before looking for shorts or else an hourly close below $1.2997.
AUD/USD back on the ascendancy after bottomAUD/USD has managed to regain ground following a failure to break back below $0.7442 on Friday. This confirms our bullish bias given the fall into the bottom end of the symmetrical triangle formation last week.
As such, further gains are expected, with a bullish view holding unless we see an hourly close below $0.7475. Watch out for the key resistance level at $0.7568, which given the extended nature of this current leg higher, could provide a spark for the pair to retrace lower once more.
