While EUR/USD is back under selling pressure, the pair would still need to extend its decline beneath 1.2605 which is now probably needed to see bearish pressure return for 1.2583, ahead of a retest of more important support at 1.2500/460 – the recent low and 78.6% retracement of the 2012/2014 uptrend, argues Credit Suisse.
If failing to do so, according to CS, the focus should turn back onto last week’s high at 1.2792.
"Further strength through here should see a move higher towards 1.2806/16 initially, on top of which can see the 23.6% retracement of the decline from May at 1.2852 next," CS projects.
"Above here can target 1.2902 and potentially as far as the mid-September high at 1.2996, where we would expect to find a cap," CS adds.
CS runs a limit order to sell EUR/USD bounces 1.2780 targeting a move to 1.210.
In USD/JPY, CS notes that while it has extended its decline, it has managed to hold above key support at 106.64/55 as expected – the 38.2% retracement of the May/October 2014 rise.
"However, with a small top still in place, the immediate risk stays lower for a retest of 106.55, below which can then see a move to the January high, 55-day average and 50% retracement support at 105.67/48. "We would look for better buying to ideally show here," CS projects.
"Near-term resistance moves to 107.50/58, followed by 107.76. Above 108.16/17 is needed to ease the immediate downside bias, for a move back to 108.7," CS adds.
CS maintains a long USD/JPY position from 107.50, with a stop at 106.55 targeting 110.60.
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