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16 May 2014
USD expected to undergo ST correction higher - JPMorgan
FXStreet (Bali) - A short term corrective phase in favour of the USD seems close, notes John Normand and Niall O'Connor, FX Strategists at JP Morgan.
Key Quotes
"The backdrop for the broad USD picture has deteriorated over the past few weeks but a short term corrective phase seems close."
"In line with the persistent weakness since April, note that several key initial support levels have been violated highlighted by the short term range lows near 79.28/33 for the DXY, as well as 84.54 March low for the JPM USD Index. With the next line of important support levels in focus, we see a critical juncture for the short and medium term views."
"Note the DXY is attempting to hold critical support in the 79.00/78.60 zone which represents the range lows from April 2012."
"Given the short term oversold setup, some recovery seems likely against this important support area. Still, a break above the 80.00/80.20 resistance zone which includes the mid-April range highs and the downtrendline from the February peak will define whether any retracement is sustainable for a shift back to the November/January range highs."
"Failures would imply a deeper corrective phase with risk into the 2012 low at 78.09 (Feb), if not the 77.30 support area, near the 61.8% retracement from the 2011 cycle low."
Key Quotes
"The backdrop for the broad USD picture has deteriorated over the past few weeks but a short term corrective phase seems close."
"In line with the persistent weakness since April, note that several key initial support levels have been violated highlighted by the short term range lows near 79.28/33 for the DXY, as well as 84.54 March low for the JPM USD Index. With the next line of important support levels in focus, we see a critical juncture for the short and medium term views."
"Note the DXY is attempting to hold critical support in the 79.00/78.60 zone which represents the range lows from April 2012."
"Given the short term oversold setup, some recovery seems likely against this important support area. Still, a break above the 80.00/80.20 resistance zone which includes the mid-April range highs and the downtrendline from the February peak will define whether any retracement is sustainable for a shift back to the November/January range highs."
"Failures would imply a deeper corrective phase with risk into the 2012 low at 78.09 (Feb), if not the 77.30 support area, near the 61.8% retracement from the 2011 cycle low."