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The US dollar has strengthened against the euro and the especially against the yen quite significantly.

Is there room for a correction? Perhaps. But in the long term,  both currencies have a potential of extending their falls against the might greenback. The team at BofA Merrill explains and provides numbers:

Here is their view, courtesy of eFXnews:

Bank of America Merrill Lynch has been and remains USD bulls and now holds a strong bullish view for USD/JPY and bearish outlook for EUR/USD.

Indeed, we think USD/JPY has further gains in store. The break of 2m channel resistance (now 111.79) clears the way above 112.42 (61.8% of the Jan’02/Oct’11 decline),” BofA argues.

This, according to BofA, should push USD/JPY towards 115.28/117.70 (long term retracement resistance and a host of measured moves).

Back below 111.00 would indicate stalling, but STAY BULLISH against the last higher low of Sep-30 (now support) at 110.09,” BofA advises.

EURUSD long term targets Bofa merrill November 2014 2015 technical levels to watch

Meanwhile, BofA notes that EUR/USD has made new lows since Aug/12.

While 1.2470/50 should be strong support, it should ultimately give way for a deeper prove of the confluence of long term support between 1.2303/1.1876 (200m and Jun’10 low),” BofA projects.

On a LONG TERM BASIS, weakness can extend to 1.1706, even POTENTIALLY 1.0550/1.0283 before all is said and done. However, we must stress that we must see much more before we can highlight the 1.0550/1.0283 zone with confidence. Right now it must be treated solely as a “possibility”,” BofA adds.

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