EUR/USD, EUR/AUD, EUR/GBP Price Setups

By Investor Empires On Jun 19, 2023

Euro vs US Dollar, British Pound and Australian Dollar – Overview:

EUR/USD He faces stiff resistance.
EUR/GBP Looks oversold, and EUR/AUD Close to strong support.
What is the trend and the key levels to watch mainly euro crosses?

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The euro may try to recoup some of its recent losses against some of its peers, thanks to a hawkish ECB rally, oversold conditions, and a disappointing series of macro data for the Eurozone. However, speculative longs in the euro which remain elevated could cap gains.

The euro rebounded against the US dollar, but continued to weaken against the Australian dollar and the pound sterling, as expected in the previous update — see “Before Eurozone Inflation: EUR/USD, EUR/GBP, EUR/AUD Rate Settings,” published on May 30 .

The European Central Bank raised interest rates by 25 basis points last week to a 22-year high and signaled more rate hikes in the coming months. Back in May, the suggestion that the tightening of financial conditions was flowing “hard” through the economy gave the impression that the ECB might be about to pause in its tightening campaign. However, ECB President Christine Lagarde’s remarks last week that the central bank still has plenty of details indicates that the ECB is in no mood to pause just yet, to help the euro.

Economic surprise index and forex positioning

Data source: Bloomberg

Eurozone macro data has softened in recent weeks, as evidenced by the Eurozone Economic Surprise Index (ESI). However, as the chart shows, the series tends to move back, which indicates that the bar for more negative surprises in the block looks low. Better-than-expected incoming data could support the single currency.

Having said that, despite the recent correction, speculative long EUR positions are still circling around 2020 highs and within the majors space (see chart), indicating continued overcrowding conditions for the single currency.

EUR/USD daily chart

Chart by Manish Gradi using TradingView

EUR/USD: Uptrend Capped?

On the technical charts, EUR/USD has rebounded from a very strong support area: March low at 1.0510, near the 200-day moving average. However, the pair has encountered severe resistance at the upper edge of the Ichimoku Cloud on the daily charts (at around 1.0970). Also, on the higher time frame charts, the 14-month RSI is set around 50-55 – a barrier to corrective rallies.

EUR/USD monthly chart

Chart by Manish Gradi using TradingView

The aforementioned conclusion is that EUR/USD might need to consolidate a bit more inside the slightly rising channel since February before starting a new trend. Above 1.0970, resistance is found at the May high of 1.1100. On the downside, the 1.0550-1.0650 provides a very strong cushion.

EUR/GBP daily chart

Chart by Manish Gradi using TradingView

EUR/GBP: Is it worth a slight rebound?

The EUR/GBP looks oversold as it is testing a major floor at the December low of 0.8545. Moreover, the crossover has met the price target of the sideways channel. A slight rebound in the short term cannot be ruled out. Such a rebound could culminate around the mid-June high of 0.8620. On the downside, a decisive break below 0.8545 could pave the way towards August low at 0.8340.

EUR/AUD daily chart

Chart by Manish Gradi using TradingView

EUR/AUD: approaching strong support

EUR/AUD is approaching a fairly strong bottom on the 200-day moving average, coinciding with the mid-May low of 1.5850. The pair seems to be oversold, which increases the possibility of a slight bounce. A break above last week’s high of 1.6000 could pave the way towards the mid-May low of 1.6130.