Flash: Stronger EUR/USD sell-off looming - JPMorgan

FXStreet (Bali) - A stronger sell-off in EUR/USD is looming but has not been initiated yet, notes Thomas Anthonj, FX Strategist at JP Morgan.

Key Quotes

"The defense of daily Ichimoku-support with the red lagging line (now at 1.3564) in EUR/USD two weeks ago enabled the market to launch another recovery leg up which can be seen as a countertrend rally only as long key-resistance at 1.3795/1.3833 (minor 76.4 %/left shoulder) is not taken out."

Below, the risk of accelerating down south to at least perform a C-wave down to 1.3358 (C = A) if not an internal 3rd wave decline to 1.3104/01 (pivot/Fib.-projection) remains very high."

"In order to kick-start such a decline and to eliminate the risk of a potential break above 1.3833 it takes a decisive break below 1.3663 (minor 38.2 %) and two consecutive lower daily closes (10pm CET) of the red lagging line below the cloud (at 1.3564 today)."

"Below the latter and ultimately below daily neckline support at 1.3515, we’d be confident that a broader downtrend is on its way which would however require final confirmation via a break below key-support at 1.3436/23 (minor 76.4 %/200 DMA)."