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US Dollar Strengthens: Impact on Major Currency Pairs

The US Dollar strengthens as the Fed’s optimistic outlook affects major currency pairs EUR/USD, GBP/USD, and AUD/USD.

In the world of finance, the US dollar has recently gained significant momentum thanks to an optimistic outlook from the US Federal Reserve. This surge in the dollar’s strength is reverberating across major currency pairs, particularly affecting the EUR/USD, GBP/USD, and AUD/USD.

US Dollar vs. Euro, British Pound, Australian Dollar – Price Setups

  • USD gains strength due to more extended Fed rates and hawkish FOMC projections.
  • EUR/USD and GBP/USD are currently testing robust support levels.
  • AUD/USD retreats from significant resistance.
  • What lies ahead for EUR/USD, GBP/USD, and AUD/USD?

US Dollar Strengthens – Impact on EUR/USD, GBP/USD, and AUD/USD

The shift in policy has notable implications for the following currency pairs

EUR/USD and GBP/USD These pairs are currently undergoing tests of robust support levels, with the EUR/USD nearing the May low of 1.0630. Despite oversold conditions, a breakthrough is challenging unless there’s a recovery surpassing the early-August high of 1.1065. A broader sideways to weak bias persists, with the next support level at the January low of 1.0480.

GBP/USD The British pound has maintained a downward bias, marked by a sequence of lower highs and lower lows since July. For the first time since the close of 2022, GBP/USD has fallen below the Ichimoku cloud support on daily charts, signifying a change in its bullish bias. Nevertheless, the cable appears oversold as it tests strong converged support near the 200-day moving average and the end-May low of 1.2300. A decisive break below 1.2300 could disrupt the higher-low-higher-high sequence seen since late 2022, potentially exposing significant support at the March low of 1.1800.

If it breaches 0.6350 lows, potential downside risks to the November 2022 low at 0.6270 could emerge. These events result from economic factors and central bank policies, shaping currency trajectories and impacting global financial markets.

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