EUR/USD is proving to be extremely resilient at these levels and our attention remains riveted on the 1.3500 level, this must hold to leave our neutral to negative bias intact. EUR/USD remains in a bear trend short term while below 1.3500. While capped here, we continue to look for a slide back to 1.2795, the 61.8% retracement of the move seen in the second half of 2010. Intraday a break back below the 20 day ma at 1.3204 should be enough to refocus attention on the downside. However the upside risk is now growing, a close above 1.3500 will negate this view for a recovery to 1.3739/86 then 1.3978/1.4000.
GBP/USD has maintained upside pressure and is poised to encounter the next resistance at 1.6090/95, this is the 78.6% retracement of the move November to December and is regarded as the last defence for the 2009-2011 downtrend, which lies at 1.6215.
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