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EUR/USD is trading towards the lower end of the recent trading range and USD/JPY continues pushing higher, rediscovering ground last seen before the Great Recession.

What are the next moves? Bank of America Merrill differentiates between the short and the longer term views for these two major pairs:

Here is their view, courtesy of eFXnews:

While Bank of America Merrill Lynch remains of the view that the USD 6m bull trend is quickly drawing to a close and that a medium-term correction lower is set to unfold, in the very short term, BofA is adopting a bearish stance on EUR/USD.

“The combination of a 5d contracting range / Triangle formation points to one more push lower toward 1.2300 and a test of the 200m MA at 1.2309, before greater signs of basing emerge,” BofA projects.

“However, we must stress that this bearish EUR/USD is a short-term view and tactical. Indeed, a move above 1.2510 would invalidate this bearishness,” BofA warns.

Bigger picture, we are looking for a medium-term base and turn higher toward 1.29/ 1.30,” BofA adds.

EURUSD Tactically bearish euro technical analysis BOFA Merrill Lynch USD forex trading

Turning to USD/JPY, BofA remains short-term bullish for a deeper probe of the 117.70 target zone.

“…But this remains a very late-stage advance and we cannot recommend initiating new longs at current levels,” BofA advises.

“Indeed, a break of 114.39/113.17 would point to a top and turn, exposing a deeper pullback toward 110.09,(Oct-08 high),” BofA adds.

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