EUR/USD charted an inside day to leave our outlook unchanged – we remain biased towards failure at 1.3245/50, the 38.2% retracement of the move down from November. However chart action at this juncture is not at all clear. The erosion of the near term uptrend has provoked NO follow through and we could even argue that there is a potential ‘bull flag’ developing (not our favoured view- but one we cannot yet dismiss). Critical will be the price action at 1.3250 – above here will keep the market on an upwards tack towards 1.3436 and even 1.3627 (the 50 and 61.8% retracements). Our favoured view is that the correction terminated at 1.3250. We suspect loss of 1.3000 should be enough to upset the bulls enough for losses to 1.2854/40 then 1.2530/88, the August 2010 low and the 78.6% retracement of the move from 2010-2011.
GBP/USD charted a tiny range just ahead of the November high at 1.5888. Ideally we would like to see failure here, however with no real signs of reversal evident (this looks like simple inertia ahead of numbers) this implies further scope to the 1.5952/200 day ma and possibly 1.6167/91 (the October high and the 200 week ma). This is the maximum topside that we expect to see for this move. Initial support lies at 1.5730, 1.5640/35 and while above here we will assume a near term upside bias is preserved. Below here would trigger losses to the 55 day ma at 1.5570 and then the base of the recent range.
USD/CHF is sidelined just above support at 0.9080/66, the November low and the 50% retracement of the move up from October. The market has not managed to clear even initial resistance and looks likely to consolidate further. It is unclear to us if the market is attempting to stabilise or if this is a continuation (down) pattern. Clearly the market will need to sustain a foothold over the first resistance level at .9244/50 (mid December low). Above here allows for recovery to the .9340/45 then .9595 recent high.
USD/JPY has sat for the past couple of days just above the 76.00 level. Having recently eroded the key Fibonacci retracement at 76.20, it remains on the defensive and attention remains on the 75.31 low and potentially 75.00/74.90 (psychological support and point and figure target from 60 minute chart). We note that we have an old time zone gap back to 75.94 and this would provide its initial target. There is some divergence on the 240 minute chart, however while this may provoke some near term consolidation, the market will remain directly offered below 76.55. Rallies would need to regain this level as a minimum in order to recover towards the 77.17/36 55 and 100 day ma.
AUD/USD charted a ‘doji’ which usually suggests indecision. The market remains at the 1.0750/65 highs seen in September and October 2011, these are expected to hold and provoke failure. We need a break below the 1.0342 2 month uptrend to alleviate upside pressure. Initial support is found at 1.0477, a near term uptrend and the 200 day ma at 1.0405. Below the 2 month uptrend at 1.0342 will alleviate upside pressure and initiate a move lower. This would then target 1.0046/00 en route to .9818 and .9664/80. Resistance at 1.0765 is regarded as the last defence for 1.1080, the July 2011 high.
EUR/JPY is consolidating just ahead of interim support at 99.00/98.90 (23rd January low and 61.8% retracement) and while this may prompt some further consolidation, we continue to favour the downside. The market has recently see failure ahead of the 102.55/60 resistance (38,2% retracement of the move down from the October peak), which implies the market is likely to have topped short term. Below 98.90 will refocus attention on to the 97.04 January low. Our slightly longer term targets are nearer to 95.00.
EUR/GBP held broadly sideways, leaving our outlook bearish. The market has recently eroded its one month uptrend and failed at the 0.8421 end of December high, and the 55 day ma at .8409 – all of which are negative. The market is contained within a 4 month down channel, which offers resistance at 0.8377 and while capped here, the market remains directly offered. We have minor support at 0.8280/76, the low from 23rd January and beyond here look for losses to extend to the 0.8221 January low and longer term the .8067/2010 low.
EasyForexNews Research Team