Has the US dollar ended its correction and consolidation, beginning a new rally? The team at BofA Merrill suspects so and focuses on two currency pairs:
For the loonie, a bull trend beyond 1.30 on USD/CAD is possible and targets are also ambitious for a lower EUR/USD:
Here is their view, courtesy of eFXnews:
Evidence says that the Greenback is resuming its long term bulltrend after 3-4wks of consolidation, notes Bank of America Merrill Lynch.
In the USD Index, BofA thinks that today’s break of Triangle resistance confirms a return to trend.
“Upside targets are seen to 97.01 and potentially beyond. Pullbacks should not break the 34d avg, while a move below the Feb-03 low at 93.25 invalidates the bullish setup,” BofA adds.
Meanwhile, in USD/CAD BofA notes that it looks to be completing its 3wk range trade with today’s reversal higher.
“Indeed, a close above 1.2487 would complete a Bullish Engulfing Candle on daily charts, adding to the bullish body of evidence. A break of 1.2643/1.2665 would confirm a resumption of the bull trend for 1.3035,” BofA projects.
Finally, BofA thinks that bearish breakout in EUR/USD indicates an end to its consolidation and a resumption of its larger bear trend arguing that following this break, price action should not trade above the Feb-19 high at 1.1451.
“EUR/USD break of 1.1270 (the Feb-09 low) targets 1.1098 (Jan-25 low) ahead of the Sep’03 low at 1.0765 and eventually below,” BofA projects.
In its technical portfolio BofA maintains long USD/CAD targeting 1.3035, and a short EUR/USD targeting 1.0765.
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