At a glance: Relax for now
Yesterday’s EUR positive ruling of the constitutional court in Germany gave the already ongoing risk recovery an extra boost so that we received first evidence of a broader recovery unfolding, particularly in European indices, where 5-wave sequences seem to be complete in the Dax and the DJEuroSTOXX 50. Stronger evidence that this is the case would however only be given once the DAX would not only close a gap up to 5493, but stabilize above. Provided this is the case, EUR/USD and EUR Crosses should have room for a temporary recovery, which currently looks to be pretty capped though at 1.4162/92 (int. 38.2 % on 2 scales) in the former, at 0.8848 (int. 76.4 %) in EUR/GBP, at 1.4021 to 1.4104 (int. 38.2 %/pivot) in EUR/CAD, at 1.3443/60 (int. 38.2 % on 2 scales) in EUR/AUD or at 7.6348/91 (pivot/int. 38.2 %) in EUR/NOK to name a few. On the CHF front, price movements almost came to a standstill after Tuesday’s intervention shock and unless minor 38.2 % retracements at 1.1748 in EUR/CHF, at 1.3363 in GBP/CHF and at 0.8320/0.8278 in USD/CHF are taken out, we expect these markets to continue trading in tight ranges with the option to extend the upside towards key-T-junctions between 1.2289 and 1.2478 (int. 38.2 % on 2 scales) in EUR/CHF and at 0.8848 (int. 38.2 %) in USD/CHF. In terms of a looming and broader USD recovery we keep a close eye on weekly trend line support at 1.3927 in EUR/USD and at 1.5906 in Cable as well as on weekly trend line resistance at 0.9993 in USD/CAD.
° Short 2 units EUR/USD from 1.4205 , targets 1.3350 and 1.3120, stop at 1.4600
° Long 2 units USD/CZK from 16.85, add 2 units on a break above 17.65, target 19.02, stop at 16.05
° Short 2 units EUR/INR from avg. 63.30, target 55.50 & 52.00, stop at 68.50
° Short 2 units PLN/HUF from avg. 68.604, target 64.00, stop at 68.600
EUR/USD hourly – Below 1.4162/92 the market remains in negative territory
° Failing to clear the first key-resistance barrier at 1.4162/92 (int. 38.2 % on 2 scales) yesterday, 1.4414 (int. 76.4 %) remains out of reach and weekly trend line support at 1.3937 at risk of being broken.
° A break below the latter would immediately challenge 1.3837 (last low), before 1.3569 and 1.3351/49 (Fib.-projection./int. 76.4 %) would come into focus.
GBP/USD hourly – Below 1.6125/70, the GBP bears remain in full control
° Yesterday’s recovery attempt fell short of even coming close to key-resistance at 1.6125/70 (int. 37.2 % on 2 scales) so that weekly trend line support at 1.5906 remains at risk.
° A decisive hourly close below (using a 0.5 % filter) would challenge 1.5781/51 (daily lows) next, before 1.5345/1.5296 (weekly lows) would be in focus.
EUR/GBP hourly – Range breakout between 0.8848 and 0.8709 required for directions
° No change here as the market is filling in the space between the decisive T-junctions on lower scale at 0.8848 and at 0.8709 (int. 76.4 %).
° Only a decisive hourly close out of this range by at least 20 bips would give the market some momentum to at least test the outer boundaries of a broader range at 0.8658 or at 0.8893 in form of daily necklines.
° To clarify the picture on a higher scale and to give the market an extra boost one way or the other, it however takes a breakout of the wider range.
EUR/NOK daily – Below 7.6348/91, the 7.2176 low from 2003 remains in focus
° Since the SNB’S intervention in CHF, NOK has become some kind of substitute to be bought instead what led to a break below the 2007 low at 7.6249.
° The latter has basically opened the way for a potential re-test of the 7.2176 low from the beginning of 2003 and as long as recoveries are capped at 7.6348/91 (pivot/int. 38.2 %), this threat remains a very viable one.
° Only a break above the latter would raise the idea that the down-trend might have reached an exhaustion point.
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J.P.Morgan
Global FX Strategy
Yesterday’s EUR positive ruling of the constitutional court in Germany gave the already ongoing risk recovery an extra boost so that we received first evidence of a broader recovery unfolding, particularly in European indices, where 5-wave sequences seem to be complete in the Dax and the DJEuroSTOXX 50. Stronger evidence that this is the case would however only be given once the DAX would not only close a gap up to 5493, but stabilize above. Provided this is the case, EUR/USD and EUR Crosses should have room for a temporary recovery, which currently looks to be pretty capped though at 1.4162/92 (int. 38.2 % on 2 scales) in the former, at 0.8848 (int. 76.4 %) in EUR/GBP, at 1.4021 to 1.4104 (int. 38.2 %/pivot) in EUR/CAD, at 1.3443/60 (int. 38.2 % on 2 scales) in EUR/AUD or at 7.6348/91 (pivot/int. 38.2 %) in EUR/NOK to name a few. On the CHF front, price movements almost came to a standstill after Tuesday’s intervention shock and unless minor 38.2 % retracements at 1.1748 in EUR/CHF, at 1.3363 in GBP/CHF and at 0.8320/0.8278 in USD/CHF are taken out, we expect these markets to continue trading in tight ranges with the option to extend the upside towards key-T-junctions between 1.2289 and 1.2478 (int. 38.2 % on 2 scales) in EUR/CHF and at 0.8848 (int. 38.2 %) in USD/CHF. In terms of a looming and broader USD recovery we keep a close eye on weekly trend line support at 1.3927 in EUR/USD and at 1.5906 in Cable as well as on weekly trend line resistance at 0.9993 in USD/CAD.
° Short 2 units EUR/USD from 1.4205 , targets 1.3350 and 1.3120, stop at 1.4600
° Long 2 units USD/CZK from 16.85, add 2 units on a break above 17.65, target 19.02, stop at 16.05
° Short 2 units EUR/INR from avg. 63.30, target 55.50 & 52.00, stop at 68.50
° Short 2 units PLN/HUF from avg. 68.604, target 64.00, stop at 68.600
EUR/USD hourly – Below 1.4162/92 the market remains in negative territory
° Failing to clear the first key-resistance barrier at 1.4162/92 (int. 38.2 % on 2 scales) yesterday, 1.4414 (int. 76.4 %) remains out of reach and weekly trend line support at 1.3937 at risk of being broken.
° A break below the latter would immediately challenge 1.3837 (last low), before 1.3569 and 1.3351/49 (Fib.-projection./int. 76.4 %) would come into focus.
°
° GBP/USD hourly – Below 1.6125/70, the GBP bears remain in full control
°
°° Yesterday’s recovery attempt fell short of even coming close to key-resistance at 1.6125/70 (int. 37.2 % on 2 scales) so that weekly trend line support at 1.5906 remains at risk.
° A decisive hourly close below (using a 0.5 % filter) would challenge 1.5781/51 (daily lows) next, before 1.5345/1.5296 (weekly lows) would be in focus.
°
° EUR/GBP hourly – Range breakout between 0.8848 and 0.8709 required for directions
°
°° No change here as the market is filling in the space between the decisive T-junctions on lower scale at 0.8848 and at 0.8709 (int. 76.4 %).
°° Only a decisive hourly close out of this range by at least 20 bips would give the market some momentum to at least test the outer boundaries of a broader range at 0.8658 or at 0.8893 in form of daily necklines.
° To clarify the picture on a higher scale and to give the market an extra boost one way or the other, it however takes a breakout of the wider range.
°
° EUR/NOK daily – Below 7.6348/91, the 7.2176 low from 2003 remains in focus
°
°° Since the SNB’S intervention in CHF, NOK has become some kind of substitute to be bought instead what led to a break below the 2007 low at 7.6249.
°° The latter has basically opened the way for a potential re-test of the 7.2176 low from the beginning of 2003 and as long as recoveries are capped at 7.6348/91 (pivot/int. 38.2 %), this threat remains a very viable one.
°° Only a break above the latter would raise the idea that the down-trend might have reached an exhaustion point.