The US dollar is getting stronger and this has implications for major pairs.
The team at JP Morgan examine the charts and point to moves on EUR/USD and GBP/USD:
Here is their view, courtesy of eFXnews:
The rather dull trading sessions as of late within fairly tight ranges didn’t deliver any fresh insights, so that prevailing trends as well as displayed ranges remain intact, notes JP Morgan.
“That said patience is a virtue once again during this hot summer break, which doesn’t leave us much of a choice than to wait for range breakouts to finally create some momentum,”JPM adds.
In this context, JPM thinks that EUR/USD is close to break below 1.0885/70 (minor 76.4 %/pivot) which should trigger another sell-off.
“The latest failure to clear key-resistance at 1.1099/1.1120 (daily trend/minor 76.4 %) leaves the market at great risk of extending the downside,” JPM argues.
“A break below 1.0885/70 (minor 76.4 %/pivot) would most likely trigger the latter, but only below 1.0744 we’d receive confirmation that 1.0072 (76.4 % of the 2000-2008 rally) is back in focus,” JPM projects.
Turning to GBP/USD, JPM notes that its technical setup suggests that a right shoulder of an H & S top remains in progress.
“It becomes obvious that the market is still busy forming the right shoulder of a broader H & S topping pattern, which could however still extend to 1.5788/1.5815 (minor 76.4 %/left shoulder),” JPM clarifies.
“Above 1.5445/15 though, an extension up to 1.5788/1.5815 remains likely,” JPM argues.
“Only a break below 1.5445/15 (daily neckline/minor 76.4 %) would confirm the completion of the pattern, which implies that the market is at least missing a stronger C-wave down into 1.4951/1.4887 (pivot/76.4 % on higher scale),” JPM projects.
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