EUR/USD continued to lose ground yesterday and has reached the short term support line at 1.3136. Failure here is expected and should be enough to refocus attention onto the 1.3004 recent low and then 1.2974/54, the February low and 61.8% Fibonacci retracement. A break below here will be needed to trigger the slide to the 1.2624 January low. The market faces a lot of overhead resistance – we have a 5 month downtrend at 1.3366, a 7 month channel at 1.3413 and the February high at 1.3487. We continue to view the 1.3487 recent high as an interim ceiling for the market. Above would allow for an extension to the 200 day ma at 1.3576, however.
GBP/USD has topped at 1.6062 – the move has been capped by the 61.8% Fibonacci extension at 1.6067 on Monday. The daily RSI has diverged on the move to a new high and the slow stochastics indicator has turned lower – both of which are negative. In addition the market has broken down from a wedge pattern and in doing so implies losses back to the 2012 support line at 1.5759. Below 1.5759 will target the 1.5599 March low en route to 1.5412, the 78.6% retracement seen this year. Intraday rallies should find resistance at 1.5937/1.6000 ahead of the 1.6062/67 peak.
AUD/USD has sold off to its interim target of 1.0260, the 50% retracement of the move up from the November low. While this may provoke some consolidation it should be extremely tepid at best. We have recently seen the market drop down through the October-to- April support line at 1.0334 and this suggests that we will see ongoing losses to the psychological 1.0000 level. Our negative bias remains entrenched while rallies are capped by 1.0476/1.0558.
USD/JPY remains choppy near term and while capped by 83.31/40 will remain downside corrective. Scope remains for losses to 81.08 and possibly also to the 50% retracement of this year’s advance at 80.11, where we would expect price to once again stabilise and reassert the longer term bull move. It is possible that the market is forming a bullish continuation pattern, but rallies will need to clear 83.40/45 to confirm upside intent and trigger a move to the 84.19 recent high. Targets remain 85.53, the April 2011 high, and then 86.80, the 23.6% retracement of the move down from the 2007 peak.
USD/CHF has extended its rebound from .9000 through the .9066 .pivot, the late November low, and beyond the 55 day ma. We look for gains to extend to the .9249 resistance line and beyond to the .9317/42. Intraday dips should find support at .9140/14 and be contained by .9000. Below .9000 would target the .8931 February low and potentially the 200 day moving average at .8865.
EUR/GBP has eroded this year’s support line and looks set to resume its downmove after 3 month of sideways trading. Key short term resistance lies at .8395 (5 month resistance line). While capped here, we will maintain a downside bias. Target is the .8221 January low and then .8067, the 2010 low. The market has sold off to the .8365 February low and it is possible that we will see an intraday rally, however this is expected to struggle to regain .8300. We assume that the recent peak at .8423 is an interim peak and while capped here our medium term outlook is bearish.
EUR/JPY remains under pressure and has fallen to the 23.6% retracement if the move seen this year, this lies at 108.03. We look for losses to extend to the 107.73 3 month uptrend, but would allow for this to hold the initial test. We note the triple top just below the 111.57 high and suspect that the uptrend will now be eroded. Failure at 107.73 would imply a deeper retracement to 105.93/65. This is the 38.2% retracement of the move seen this year and also the March low. Near term rallies are expected to find resistance at 109.52/95 ahead of 111.57.
EasyForexNews Research Team