Our measured range objective at 1.0876 has been achieved, but we stay bearish to test 1.0826/22 next. EURUSD remains under intense selling pressure and has extended its sell-off to remove the June 2016 spike low at 1.0913. The break signals a more sustained phase of weakness and has seen it fall to achieve our measured range objective at 1.0876. We are wary of a knee jerk bounce, however, we see the overriding risks still lower to 1.0826/22, next ahead of the January low at 1.0711.
Capitulation beneath the latter would open up a move to the lower end of the medium-term range at 1.0610/05. Resistance moves to 1.0952/63 initially, with 1.1039/46 ideally capping to keep the trend directly lower. Above here can aim at 1.1058/80.
Strategy: Holding a short below 1.0910, stop above 1.0963 for 1.0615.
Resistance from the key range highs at 104.32/64 continues to cap. USDJPY remains trapped in a sideways range, just below key range resistance at 104.32/64 – the recent high and 61.8% retracement of July/August decline – which we continue to look for ideally cap.
Near-term support moves to 103.23/17. Below here and 102.90/81 – the mid-month price low and the 38.2% retracement of the recent rally – remains needed to set a top for a decline back towards 101.85/81. Above 104.64 is needed to secure a better base for 105.64 initially, followed by 106.55.
Strategy: Flat. Sell at 104.20, stop above 104.64, for 103.00.