EUR/USD has eroded the 2 month uptrend support, this has yet to generate much of a sell off, and the market is finding some support from the top of cloud at 1.3096. This is expected to be eroded, technical indicators are negative – the daily RSI is breaking down and the daily DMI has a sell signal on it. We target 1.2974/54, the February low en route to the 1.2624 January low. We expect rebounds to remain tepid and look for them to remain capped by the 1.3250/1.3322 band (9th February high). Minor resistance can be seen around last Wednesday’s low at 1.3389, the 50% retracement at 1.3436 as well as at the 1.3487 February peak. While trading below here, the outlook will remain bearish.
EUR/GBP continues to consolidate at the 2 month support line today at .8306. Beyond a small rebound, the risk remains that we will see a drop through it to the .8265 February low and then the .8221 January trough. We look for rebounds to remain tepid. Minor bounces should fail in the .8397/.8421 region which includes all the daily highs from late December to early February and this should act as a tough near term obstacle. Our medium term forecast will remain bearish while trading below the February peak at .8505.
GBP/USD has eroded the 2 month support line. Focus has shifted to more important support at 1.5650/43 – this will need to be fallen through for a top to be confirmed. This is where the late January and February lows were made. Having seen such an emphatic rejection at 1.60, we are inclined to think this is only a matter of time. Minor resistance is offered by the 200 day ma at 1.5886, with more important resistance around the 1.6000 mark. While below here, we will remain bearish.
USD/CHF has eroded the 6 week down channel and we regard the market as having based at 0.8931. We look for gains to the 55 day moving average at .9257 and then the .9317 October 2011 peak. This is regarded as a medium term pivot and a move back above here will trigger a rally towards the 0.9595 January peak. Dips lower will find interim support at 0.9085 and we will maintain our bullish forecast while USD/CHF trades above its February low at .8931.
AUD/USD once again charted an aggressive down session. It has eroded its 4 month uptrend and the February low at 1.0598. Failure here confirms that the market has topped and we look for a slide back to the 200 day ma at 1.0408 and the December 2011 high at 1.0382. These are considered to be MINIMUM downside objectives and also considered to be the break down point to 1.00 and beyond. Intraday rallies will find resistance at 1.0710 and the market will remain directly offered intraday below here. The market is expected to stay below the 1.0815/57 resistance area where several February highs were made. We would highlight the large divergence of the RSI, which has broken lower and this adds weight to the idea that the AUD/USD has topped out.
USD/JPY is under pressure near term, having failed to maintain a foothold over the 81.49/63 resistance zone (July peak and the 61.8% Fibonacci retracement of the April-to-October descent). We note the divergence of the daily RSI and this suggests caution, but only if the cloud support on the 240 minute chart at 80.50 was eroded would any real danger of a correction lower emerge. Once 81.49/63 gives way, though, the May high at 82.23 will be back in play. Longer term we remain bullish and have a base measurement to 83.80. Cloud support is reinforced by the 50% retracement of the 2011 decline at 80.42 and at the minor psychological 80.00 level as well as around the 79.55 May low and 38.2% Fibonacci retracement at 79.21.
EUR/JPY is on the defensive near term and has reached 105.58, the 6 week uptrend. We would allow for an intraday bounce from here, however yesterdays sell off looks quite directional and the risk has increased that this will be eroded. Failure here would target the 2 month uptrend at 103.86, where ideally we should see signs of stabilisation. Note that we consider KEY support to be 102.21/101.79, the 14th February low. Intraday the market will remain directly offered below 108.00 and will need to regain the 108.75 resistance to retarget the 55 week moving average and July low at 109.38/58. Directly above here lies the 50% retracement of the April-to-January decline at 110.26 and the October peak at 111.57.
EasyForexNews Research Team
