EURUSD bounced back on Wednesday as it consolidated recent losses. However, we expect the 1.0506/31 “breakdown point” to cap to keep the trend directly lower.
Removal of the 1.0352 recent low can see further downside to test 1.0342/36 next. Our core target remains in the broad 1.0109/.9921 zone – the long-term uptrend from 1985 and two key retracement supports. However, although we would expect an initial hold to be seen here, we continue to look for a break in due course for a move to .9625.
Resistance moves to 1.0452 initially, then 1.0482, with the recent breakdown area at 1.0506/31 expected to attract renewed selling.
Strategy: Short, stop above 1.0670, for 1.0100.
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USD/JPY
USDJPY has settled into a high level range this week capped just below the downtrend from August last year and recent high at 118.59/66. With RSI momentum still showing a divergence we must allow for this level to cap further
However, we look for a break above here in due course to aim at 120.00/12 next – the 78.6% retracement of the 2015/2016 bear trend. Support moves to 116.99/98 then 116.55, then 116.28/13, which we ideally look to try and hold and turn prices higher again. Below can see a deeper decline to 115.47.
Strategy: Flat. Buy at 116.45/25, stop below 115.90, for 118.50.
