Technical snapshot of major FX pairs
|EUR/USD
EUR/USD steamrollered higher last week, surging past the 1.1100 handle with ease.
With bullish momentum behind it EUR/USD looks poised to re-test the US election highs of 1.1300.
Our EUR/USD strategy for this week is pretty straight forward: buy the dips on lower timeframes, unless of course Wednesday’s FOMC minutes prompts a change in momentum.
GBP/USD
Cable continues to grind its way higher despite Theresa May’s lead in the polls being more than halved following the underwhelming release of the Conservative manifesto.
Whilst we’ve seen an uptick in cable’s volatility, prices have remained within the confines of the ascending channel we mapped out two weeks ago.
The bottom of the channel is starting to converge with the ascending trendline projected from the March-April swing lows. Should prices retest this confluent support level it is likely to create an attractive buying opportunity.
USD/JPY
Last week USD/JPY failed miserably to maintain its early-May breakout, posting its largest single-day sell-off since last summer. The sell-off was triggered by widespread risk aversion following news of an independent investigation into Trumps dealings with Russia.
Unlike equity markets USD/JPY hasn’t been able to muster much of a fight back. Instead, prices have started to coil near their lows with Friday’s inside day the smallest range in the last seven sessions.
Given the intensity of Friday’s price compression and the strength of last week’s sell-off we expect prices to break lower this week, in-line with dominant momentum.
AUD/USD
The Aussie’s retracement phase has reached a pivotal stage as the market presses into previous structural support at 0.7460.
This resistance level coincides with the 61.8% Fibonacci retracement level of the last sell-off leg and the top of a descending channel.
Whilst this key area of resistance is compelling, AUD’s recent relative strength should be respected until will see a clear price action sell signal.
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