The Euro surges against dollar yesterday with the help of successful bond auction in Spain and France. Markets viewed the solid result of easing funding stress and bids up Euro. EUR/USD breaks through 1.28 level to resume recent rebound, taking other European majors higher.
The bias is currently slightly bullish in nearest term but we are still in upside correction scenario testing maximum till 1.31 levels. We see Immediate support at 1.2650. Break below that area could trigger further bearish pressure testing the 1.2550 area but as long as price move inside the bullish channel we are still in upside correction phase .
Please note that the overall medium term bias and trend is bearish below 1.30-1.31 levels. We feel it is just retracing of the entire fall seen last 6-8 months.(EURUSD - 1.2920). Neutral
Pound
The GBPUSD continued its bullish momentum yesterday, topped at 1.5475 and currently trading at 1.5420 levels. The bias remains bullish but heavily overbought too. Maximum room till 1.5550 levels. Watch out for potential downside pullback testing 1.5200 - 1.5150 support area.
Overall we are still in strong upside correction phase after the failure to consistently move below 1.5000 support area and only a movement back below 1.4970-80 could diminish the upside scenario. Exporters can look at covers at current levels. (GBPUSD - 1.5420). Neutral
Yen
The USDJPY broke the 88 area . The bias remains bearish for the pair testing 86.00- 87.00. On the upside, we need a clear break above 89.15/50 area to continue bullish correction testing 90.50. (USDJPY—87.00) Bearish
Aussie
The AUDUSD slipped below 0.8800 levels due to china’s demand concerns. The bias remains rangebound but overbought. Any type of news signifying downward growth concerns for the emerging economies like China would seriously weigh down the currency. Immediate support at 0.8700 - 0.8660 area. (AUDUSD - 0.8749).
Dollar Index
The Dollar index's brief recovery completed at 84.56 yesterday and dropped sharply through the medium term trend line support.
The weekly close below 38.2% retracement of 74.19 to 88.70 at 83.15 will solidify this bearish case and bring deeper decline going forward towards 80.04 support, which is close to 80 psychological level as well as 61.8% retracement at 79.73.
Incase we don't see 84.56 resistance breaking we have to look for further weakness in the index. (Dollar Index– 82.42) Neutral
