Pound Tumbles On Brexit Poll, EUR/USD and AUD/USD Antsy at 200DMA
- The Pound plunged after a ICM poll showed a majority shift to the Brexit 'Leave' camp, but is there follow through?
- Dollar volatility remains but direct is still dithering with EURUSD and AUDUSD looking at opposing 200-day averages
- Risk trends slipped to close the month but a tactical approach is still best for Yen crosses and indexes
See how retail traders are positioning in the majors using the SSI readings on DailyFX's sentiment page.
Top mover in the FX market this past session was the British Pound. GBP/USD posted its biggest single day drop in 10 weeks and many of the Sterling crosses have pressured or are nearing critical technical levels. The question now is whether there is conviction in this move to force impending GBP support levels or whether a hold and reversal may be more appropriate. Consider the spark for this move was a shift in the regularly updated Brexit polls and the vote is still more than three weeks out, it may be difficult to mount a sustainable conviction. That presents interesting circumstances for GBP/USD, EUR/GBP and GBP/JPY amongst others.
Elsewhere, the volatility from the Dollar lacked for absolute direction as well as conviction. That immediately undermines the seeming potential for critical technical setups for EUR/USD and AUD/USD which are both staring down their 200-day moving averages. The former finds the long-term average as support around 1.1100 which would break with a strong Dollar bullish view. The latter finds its average as resistance at 0.7250 which breaks should the Dollar weaken significantly. Even a 'path of least resistance' outcome for the Greenback would necessitate a divergent trend from the benchmark currency. And all of this will be carved out before Friday NFPs.
Event risk ahead will carry important influence for Asian assets and the Australian Dollar in particular with China PMIs and Australian GDP. The pound will struggle for event-driven conviction without a capable driver on hand. Risk trends and the Dollar are light for convincing accelerants despite their respective proximity to meaningful technical resistance. We look at these key trends and their capacities for reversal or continuation in today's Trading Video.
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