EUR/USD despite weak payrolls on Friday, the rebound on EUR/USD has been tepid at best and the market starts this week sitting just above the 1.3004 March low. Key short term support remains 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 has eroded its 3 month support line and this now offers immediate resistance at 1.3162. The market faces a lot of overhead resistance – we have a 5 month downtrend at 1.3352, a 7 month channel at 1.3392 and the February high at 1.3487 and we continue to look for these to cap.
GBP/USD has sold off to the 55 day ma at 1.5819. While this has prompted a small bounce, we look for this to remain tepid. We continue to view the market as having topped at 1.6062, following its break down from a wedge pattern. 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. Key near term support is the 2012 support line at 1.5785 and we look for this to give way shortly. Below 1.5785 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 1.5935/65 ahead of the 1.6062/67 peak.
AUD/USD continues to sit on 1.0260, the 50% retracement of the move up from the November low. While this has provoked some consolidation, rebounds should be extremely tepid at best. We favour a break down through 1.0240 towards psychological support at 1.00 and then .9919/.9863 the December 2011 low. We have recently seen the market drop down through the October-to- April support line now at 1.0362 and this suggests that we will see ongoing losses. Our negative bias remains entrenched while rallies are capped by 1.0433/1.0558.
USD/JPY has continued to ease back and remains downside corrective short term. The market is poised to meet its initial corrective target of 81.08. This is the 38.2% retracement of the move higher seen this year. It is possible that the market will attempt to reassert its bull move from here. However our preferred scenario is that we will see a deeper retracement unfold to the 50% retracement of this year’s advance at 80.11, where we would expect price stabilise. Note the 55 day ma at 80.46 and the 1995 low at 79.92 are also found in this vicinity. The market will remain offered intraday below 82.65/72 (resistance line). Rallies will need to clear 83.40/45 to confirm upside intent and trigger a move to the 84.19 recent high.
USD/CHF has rallied towards the .9232 resistance line. The market is consolidating below here and we would allow for some slippage back towards .9110/.9066, but would once again expect to see stabilisation ahead of .9000. We are biased towards the topside and look for an erosion of the 3 month resistance line shortly. This will trigger a move to the .9317/42. Below .9000 would target the .8931 February low and potentially the 200 day moving average at .8876.
EUR/GBP has sold off towards the .8221 January low. We would allow for this to hold the initial test. There is some divergence of the 240 minute RSI and the 240 minute slow stochastics indicator has based. However it should be noted that the market is viewed as having recently broken down from a 3 month consolidation and we would expect to see rallies remain tepid. Intraday rallies are expected to find resistance at .8295 and remain contained by .8400. Below .8220 will target.8067, the 2010 low.
EUR/JPY has eroded its uptrend to extend its move lower to more important support at 105.93/65. This is the 38.2% retracement of the move seen this year and also the March low. We note the close proximity of the 200 day ma at 105.96 and the top of the cloud on the daily chart at 106.15 and suspect that we will see a rebound from here. Is this going to be the extent of the correction lower? The sell off from approximately 111.13 looks directional and we are alert to the idea of a deeper retracement taking hold to the base of the cloud at 103.50. Intraday rallies are likely to find interim resistance at 108.07/65.
EasyForexNews Research Team