USD/JPY Shows Its Age As EUR/USD Corrects Higher – BofA

USD/JPY is climbing to new highs and EUR/USD is also going up for a change.

What’s next? Here are the thoughts from Bank of America Merrill Lynch:

Here is their view, courtesy of eFXnews:

Bank of America Merrill Lynch remains long-term USD bulls (targeting the 106.00 area in the USD Index), but  in the near and medium term the USD is set to struggle/ correct lower.

“Indeed, EUR/USD has already begun to correct higher. We look for this correction to continue in the weeks ahead towards 1.28/1.30,” BofA notes.

“Above 1.2559/1.2578 should result in an upward acceleration. Back below 1.2416(week long channel base) warns that the larger bear trend is resuming more quickly than anticipated,” BofA projects.

Turning to USD/JPY, BofA argues that while they can’t rule out a deeper probe of the 115.28/ 117.70 target zone, this remains a very late-stage advance and we cannot recommend initiating new longs at current levels.

“Indeed, a break of 115.72/114.89 would point to a top and turn, exposing a deeper pullback toward 110.09 (Oct-08 high) and potentially below,” BofA adds.

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