Since the fall to 1.2360, EUR/USD is attempting to bounce back, but isn’t going too far. TD suggests fading any bounces.
On the other end of the spectrum, USD/JPY provides opportunities to do the opposite: buy the dips. Here is the logic and the chart:
Here is their view, courtesy of eFXnews:
EUR/USD downtrend retains very strong underlying momentum so near-term gains are liable to remain quite limited, says TD.
As such, TD thinks that a test of trend/40-day MA resistance at 1.2670 might be on the cards near-term but much higher than that seems unlikely absent a stronger sense that the bear trend is losing broader momentum.
“We would still prefer to look to fade short-term gains against clear resistance in the upper 1.26s currently,” TD advises.
“EURUSD’s bigger technical picture tells a similar story to the weekly chart. The underlying trend still looks quite powerfully bearish and there is a broad band of congestion between the low 1.26s and upper 1.27s which should serve to reinforce the short-term resistance point noted above,” TD adds.
In USD/JPY, TD thinks that the 114.00/115 area will remain something of a swing point for the USD early this week though; below support there and the USD may backtrack modestly (113).
“Despite the extensive move up in the USD over the past few weeks, the underlying trend here remains strongly aligned in favour of USD strength, however, and that suggests limited scope for USD weakness near-term and the likelihood of a strong bid for the USD on dips,” TD projects.
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