EUR/USD near term trading is limited to 1.3000-1.3250/80. We wait a break from here to determine the short term direction. We remain biased towards failure at 1.3245/50, the 38.2% retracement of the move down from November. However we could argue that there is a potential ‘bull flag’ developing (not our favoured view- but one we cannot yet dismiss). Price action at 1.3250/80 will be critical – above here will keep the market on an upwards tack towards 1.3436 and even 1.3627 (the 50 and 61.8% retracements). Our favoured view however is that the correction terminated at 1.3250. We suspect loss of 1.3000 should be enough for a slide to 1.2854/40 then 1.2530/88, the August 2010 low and the 78.6% retracement of the move from 2010-2011.
GBP/USD has sold off to initial Fibonacci support at 1.5730 (23.6% retracement of the recent leg higher). The market has recently failed at the 1.5888 November high but will need to erode 1.5730 then 1.5640/35 to alleviate immediate upside pressure. Currently we are unable to rule out another push higher. Above 1.5888 implies further scope to the 1.5943/200 day ma and possibly 1.6167/71 (the October high and the 200 week ma). This is the maximum topside that we expect to see for this move. Failure at 1.5635 would trigger losses to the 55 day ma at 1.5575 and then the base of the recent range sub 1.5200.
USD/CHF has started to erode initial resistance at .9250 and this adds weight to the idea that the market is attempting to base near term just above support at 0.9080/66, the November low and the 50% retracement of the move up from October. Clearly the market will need to sustain a foothold over .9244/50 (mid December low). Above here allows for recovery to the .9317/45 (October high and the 55 day ma) then .9595 recent high. Failure at .9080/66 will trigger a slide to .8960, the 50% retracement.
USD/JPY rebound off the 76.00 support has yet to regain the previous trendline at 76.87, which it must do in order to restore upside pressure. Above here should see recovery towards 77.16/33 (55 and 100 day ma) and then the more important 77.14/29 band (the December highs and 200 day ma). Below 76.00 will leave the market on the defensive and place attention back on the 75.31 low and potentially 75.00/74.90 (psychological support and point and figure target from 60 minute chart). We note that we have an old time zone gap back to 75.94 and this would provide its initial target.
AUD/USD is eroding the 1.0750/65 highs seen in September and October 2011. This is seen as the last defence for 1.1080, the July 2011 high. The market remains bid while above the 1.0369 2 month uptrend. A break below here is needed to alleviate upside pressure. Initial support is found at 1.0512, a near term uptrend and the 200 day ma at 1.0404. Only below the 2 month uptrend at 1.0369 will alleviate upside pressure and initiate a move lower. This would then target 1.0046/00 en route to .9818 and .9664/80.
EUR/JPY the rebound from interim support at 99.00/98.90 (23rd January low and 61.8% retracement) is poised to reach the 55 day ma at 101.16, leaving the market somewhat sidelined. The market will need to regain this level in order to refocus attention on the topside. The market has recently seen failure ahead of the 102.55/60 resistance (38,2% retracement of the move down from the October peak), which implies the market is likely to have topped short term. Below 98.90 will refocus attention on to the 97.04 January low. Our slightly longer term targets are nearer to 95.00.
EUR/GBP outlook remains bearish, the market is being contained lower within the confines of the 4 month down channel at 0.8364. The market has recently failed at the 0.8421 end of December high, and the 55 day ma at .8398 – which is negative. Minor support lies at 0.8262, the 78..6% retracement and we look for losses to extend to the 0.8221 January low and longer term the .8067/2010 low.
EasyForexNews Research Team