Explore market shifts as the US Dollar weakens; analyze EUR/USD, GBP/USD, and AUD/USD price movements and trends.
The US dollar experienced further losses, reaching its lowest point since early August. Concurrently, EUR/USD, GBP/USD, and AUD/USD exhibit upward movements, surpassing significant price levels.
The DXY index, measuring the performance of the US dollar, has retreated for the fourth consecutive trading session, settling below 103.00. A pullback in US Treasury yields is causing this decline. The shift in US interest rate expectations towards a more dovish stance, driven by speculation that the FOMC has concluded its tightening cycle, gained momentum. Federal Reserve Governor Christopher Waller’s recent statement, expressing confidence in the current monetary policy and openness to rate cuts if inflation slows, further fueled this sentiment.
In response, the euro, British pound, and Australian dollar posted substantial gains against the weakening US dollar, breaking through key levels. Considering market sentiment price dynamics, this analysis delves into the technical outlook for EUR/USD, GBP/USD, and AUD/USD.
US Dollar in Decline: EUR/USD, GBP/USD, and AUD/USD Trends
EUR/USD Technical Analysis
EUR/USD extended its advance, breaching Fibonacci resistance at 1.0960. If the pair maintains recent gains and establishes support near 1.0960, an upward push towards 1.1080 may ensue after consolidation. Continued bullish momentum could shift attention to 2023 highs near 1.1275. Conversely, a downward shift from current levels could trigger a move towards 1.0840, with potential retreats towards the 200-day simple moving average near 1.0760.
GBP/USD Technical Analysis
GBP/USD, on a bullish trend since November, reached its highest level since late August. Despite gains, it struggled to reclaim the 61.8% Fibonacci retracement of the July/October slump at 1.2720. If this resistance holds, a drop towards 1.2590 and 1.2460 may follow. A clear break above 1.2720 could improve sentiment, opening the door to upward moves towards 1.2850 and 1.3000. However, exercise caution as the pair approaches overbought territory.
AUD/USD Technical Analysis
AUD/USD surged on Tuesday, surpassing a critical technical ceiling in the 0.6600-0.6620 range, reaching its highest level in almost four months. While past fakeouts warrant caution, a sustained breakout could focus on trendline resistance at 0.6675, followed by 0.6800. On the downside, support lies in the 0.6620/0.6600 area. A breach may lead to a retracement towards the 200-day simple moving average, potentially testing the 0.6525 region. Vigorous defense of this support is crucial, as a breakdown might trigger a pullback towards 0.6460.