16 Jul 2013
Flash: EUR/USD, violation of 1.28/1.2745 implies 1.25/1.2435 target - JPMorgan
FXstreet.com (Barcelona) - EUR/USD will most likely face important resistance at the 1.3250/60 area (76.4% retrace) ahead of the critical 1.3418 June high, notes Nial O'Connor, FX Strategist at JP Morgan Securities.
According to O'Connor, "A violation of these levels would imply a more defensive short term bias for the USD while also reasserting the broad medium term consolidation phase."
The important upside hurdles for the USD also remain well-defined, O'Connor notes: "Sustained breaks of the 84.50/93 area for the DXY which includes the May high and the 76.4% retracement from the 2010 peak should help confirm a deeper extension from the June low leading to a test of the 86.40/45 area, if not a closer test of the 88.71 cycle highfrom 2010."
However, O'Connor still supports the broad topping pattern for EUR/USD below the February high, suspecting that "a violation of the 1.28/1.2745 zone which includes the medium term range lows and the neckline of the head and shoulders pattern would imply a deeper pullback initially into the 1.25/1.2435 zone."
According to O'Connor, "A violation of these levels would imply a more defensive short term bias for the USD while also reasserting the broad medium term consolidation phase."
The important upside hurdles for the USD also remain well-defined, O'Connor notes: "Sustained breaks of the 84.50/93 area for the DXY which includes the May high and the 76.4% retracement from the 2010 peak should help confirm a deeper extension from the June low leading to a test of the 86.40/45 area, if not a closer test of the 88.71 cycle highfrom 2010."
However, O'Connor still supports the broad topping pattern for EUR/USD below the February high, suspecting that "a violation of the 1.28/1.2745 zone which includes the medium term range lows and the neckline of the head and shoulders pattern would imply a deeper pullback initially into the 1.25/1.2435 zone."