A stress buildup is becoming increasingly apparent in FX markets. USD/JPY dropped below 95.00, contrary to our expectations, and EUR/CHF continues to trend lower following a topping pattern highlighted in Daily FX Technical Strategy 4 June: Recent trends tapered. The US Dollar Index’s recent drop below the 200-day average also argues for further profit taking, especially as S&P 500 futures are trading below the early-September bullish breakout levels near 1600. For EUR/CHF, this is likely to keep the market under pressure for a test of the 1.2180/95 zone.
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Barclays