EUR/USD is consolidating just above the 1.2624 January low. The market has seen a very shallow rebound so far, following its key day reversal charted on Friday and continues to weigh on the downside. Currently we remain unable to rule out a deeper corrective rebound to 1.2887 then 1.2963/65, this is a double Fibonacci retracement but we would expect the market to struggle here, if seen. Failure at 1.2624 will trigger losses initially to 1.2530, the 78.6% retracement of the move 2010-2011 – this is the last defence for 1.2066, the 55 MONTH ma.
GBP/USD remains on the defensive – we have seen a very shallow sideways consolidation at the 1.5819/1.5768 region and this leaves risks on the downside. This is the 200 day ma and the 50% retracement of the move seen this year. We saw a close below 1.5768 (just) and should see some follow through on the downside today to confirm the next leg lower to the 1.5599 March low is underway. Rallies will find interim resistance at 1.5867/1.5950 and should remain contained by the 1.6020 region.
AUD/USD has seen a very shallow upside correction near term and again sold off and appears to be on course for the .9664 November 2011 low. We would expect to see some consolidation here ahead of losses back to .9407/.9388. This is where the 2011 low and the 2009 and April 2010 highs can be found. The market has a 13 count on the Tom de Mark TD Combo on the daily chart, that suggests caution. But for now while capped.
USD/JPY has seen a strong recovery from the 79.00 region – however this has so far not managed to overcome the 80.13 down channel. This is not enough to negate the impact of last weeks price action, which was an outside week to the downside and as a consequence we cannot rule out further losses. We note that the daily RSI has not confirmed this break to a new low but the down channel dominates price action. We have redrawn the channel and this offers resistance at 80.13 – while capped here we will assume the risk remains for losses to the 200 day ma at 78.53 and possibly to 77.79 – the 78.6% retracement of the same move.
USD/CHF has seen a strong rebound – this has not been quite enough to restore the upmove and negate the effect of the key day reversal on Friday. As a consequence we remain unable to rule out a slightly steeper correction lower towards .9335/25 ahead of resumption of the upmove. The .9335/25 zone represents the March high and the 38.2% retracement. There is scope for .9271/.9252 (50% retracement). Beyond this we should see a recovery and a challenge to the January peak at .9595. The 2008 low at .9572 is also found here and we expect this to hold the initial test. We consider the region as pivotal longer term.
EUR/JPY has continued to see a small corrective rebound from the 78.6% Fibonacci retracement at 100.12. Rallies will find initial resistance now at 102.76/79, last week’s low and the 23.6% retracement of the move down from the April peak. Trendline resistance lies at 104.02. While below here, an overall downside bias should be maintained.
Interim support lies at 100.75/60 ahead of the 100.12 recent low. Below 100.12 would target 99.25 the February low, which is regarded as the last defense for the January low at 97.04.
EUR/GBP has eased back slightly after filling the gap to .8096. We are not convinced the correction higher is over, last weeks price action represented a key week reversal and we suspect that we will see the market move beyond .8096/.8100. Rallies should find resistance at .8221, the January low, we also find here the 23.6% retracement of the move down from the 0.9802 June 2011 peak. While below here, the medium term outlook will stay bearish. Dips lower will find minor support at .8025 ahead of .7950. Below .7950 we look for another down leg towards the 61.8% Fibonacci retracement of the move in 2007-2008 at .7795.
EasyForexNews Research Team