EUR/USD has charted a minor new low for the year, but before we jump whole heartedly on the bear wagon we would highlight the 1.2530 78.6% retracement of the move from 2010 to 2011. We will need to see a close below here to confirm the next leg lower is underway. While we acknowledge that the market is exposed on the downside, until we see this close we remain unable to ruler out a corrective rebound to 1.2720 and 1.2820/30 this is an interim high and Fibonacci retracement but we would expect the market to struggle here, if seen. The 1.2530 support is regarded as the last defence for 1.2066, the 55 MONTH ma.
GBP/USD dropped to 2 month lows yesterday, this has yet to confirmed by the daily RSI and the 240 minute RSI. This implies a possible shallow correction ahead of further losses. We saw a close below 1.5768 and should see some follow through on the downside in the next couple of days to confirm the next leg lower to the 1.5599 March low then the 1.5463 78.6% retracement is underway. Rallies will find interim resistance at 1.5848/1.5913 and should remain contained by the 1.5988 region.
AUD/USD continues to inch lower 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. We also note the triple divergence of the 240 minute RSI and this also raise a red warning flag – we would lighten up short positions or tighten stops. For now while capped by .9875/9935 we will assume that the market remains directly offered.
USD/JPY remains dominated by the down channel at 80.05 today and near term risk is on the downside. We suspect the market is attempting to stabilise, however 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. While capped here we will assume the risk remains for losses to the 200 day ma at 78.56 and possibly to 77.79 – the 78.6% retracement of the same move.
USD/CHF has rallied higher and is approaching major resistance at .9572/.9595, this is the 2008 low and the 2012 high, we expect it to hold the initial test and provoke some profit taking. Dips lower will find interim support at .9447 ahead of .9370/35. This represents the March high and the 38.2% retracement. The .9572/95 resistance is key longer term, we will need either a weekly close or 2 day closes to confirm a break higher. This will introduce scope to the .9950/61.8% retracement of the move down from 2010.
EUR/JPY has come under increasing downside pressure and eroded the 78.6% Fibonacci retracement at 100.12. This targets 99.25 the February low, which is regarded as the last defense for the January low at 97.04. Rallies will find initial resistance now at 102.13/27, interim high and the 23.6% retracement of the move down from the April peak. Trendline resistance lies at 103.83. While below here, an overall downside bias should be maintained.
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 .8000 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