EUR/USD steadied somewhat yesterday after the ECB press conference. While we may see further ranging, the risk will remain on the downside and while capped by the 1.3262/68 downtrends, these are the 5 month downtrend and the 8 month channel. Technical indicators remain negative Initial support is the base of the cloud at 1.3110 and the 1.2994 recent low. However key near term support is 1.2974/54, the February low and 61.8% Fibonacci retracement. Failure here will target the 1.2624 January low. Should the downtrends be eroded (not favoured)- this would imply a retest of the 1.3487/1.3510 recent high and 38.2% retracement of the move down from the 2011 peak.
GBP/USD remains downside corrective very near term. The market has reached its initial support at 1.6167 – the October 2011 high and there is scope for a deeper retracement to 1.6110/1.6050 – we would expect this to hold. 1.6050 is the 50% retracement of the move up from mid April and the 23.6% retracement if the move seen this year. While above here the market remains on course to challenge to 1.6425/the 78.6% retracement of the move down from the 2011 peak. We have minor resistance ahead of here – a one year resistance line at 1.6336. Below 1.6050 would allow a slide back to the 2012 uptrend at 1.5945 and the 200 day ma at 1.5839 – however key support is the 1.5821/05 double Fibonacci retracement and the April low.
AUD/USD attention has reverted to the downside and in particular to the 1.0260/28 supports (50% retracement of the move up from the November low and the recent low). The market remains under pressure and is now weighing on these supports following its recent failure at the 38.2% retracement of the move down, at 1.0468. Below 1.0228 will target 1.0120 then .9919. Above 1.0475 would allow for a test of 1.0542, the 509% retracement.
EUR/JPY remains under pressure and on course for the recent low at 104.625, just ahead of its corrective target of 104.24 and we look for this to hold. It needs to regain 108.00 to see a recovery to 108.62, the 61.8% retracement of the sell off seen in April and then 111.43/57 and while capped here the risk remains on the downside. Key support remains 104.25/23. This is the base of the cloud and the 50% retracement of the move seen so far in 2012. Below here will target 102.54, the 61.8% retracement of the move seen this year.
EUR/GBP downside momentum is slowing as the market approaches 0.8067, the 2010 low. The divergence of the daily RSI suggests a loss of downside momentum. We would tighten up stops on shorts as we look for the .8067 support to hold the initial test. While capped by the previous .8221 January low the market remains directly offered. Rallies should find initial resistance at .8172 ahead of .8221. Above .8221, we would allow for the possibility of a deeper corrective rebound to .8277/81 ahead of the next leg lower (38.2% retracement of the sell off from the February peak and the April high). Key resistance is the 2011- 2012 channel at .8445.
USD/JPY is attempting to recover, however the market will need to overcome the 80.94 resistance line. We would currently allow for further slippage to 79.15/78.94 (61.8% retracement and the 55 week ma), where we would expect the market to stabilise and recover. Only a break above the 80.94 resistance line would allow for gains to the 82.51 cloud resistance and 83.31/39 then the 84.19 recent high. The top of the daily cloud is likely to act as resistance en route.
USD/CHF has rallied towards and failed just ahead of the .9181 resistance line. We need a break above here to regenerate upside interest, the technical indicators are positive and above .9181 will target the .9252 April high. We would expect dips to find support at the .9066 pivot ahead of the .9043 May low. Slightly longer term, we view the price action this year as a consolidation, in an overall bull trend. Above .9186 would add weight to the idea that the bull trend had resumed.
EasyForexNews Research Team