In today’s Forex Video Briefing, we will take a look at the EUR/USD, GBP/USD, USD/JPY and EUR/CHF.
EUR/USD extended higher after the FOMC event risk and after putting in a price bottom. There is upside toward the 1.3675 high, but we should be seeing some resistance as the rally approaches this resistance and as the RSI approaches 70. A break above the 1.37 handle will be needed before we should consider the bullish reversal scenario, under 1.37, the prevailing bearish trend should be respected and the focus should remain towards 1.35 and the 1.3476 low on the year.
GBP/USD rallied despite the UK seeing a drop in retail sales in May. It fell posting a -0.5% reading, and the April reading was revised down from 1.3% to 1.0%. Traders however are focused on pricing in earlier expectations of an BoE rate hike after recent hints from Carney and the BoE that it may even be in late 2014. The GBP/USD is breaking higher, and will be at multi-year high as it tests the 2009-high at 1.7040. Expect some resistance attempts and choppiness in the short-term, but the bullish GBP/USD is clearly a candidate for buying a dip. A break above 1.7040 will be a major bullish continuation signal.
USD/JPY is showing bearish bias after failing to break above a falling trendline this week, and after the reaction to the FOMC event risk, which was a broad USD-sell off. If we get a near-term pullback, watch for resistance in the 102-102.10 area. The focus should remain toward the 101.42 and 100.82 support pivots.
EUR/CHF is trading at a common support for May and June, around 1.2165. A break below 1.2160 opens up the next support pivot at 1.2140 as well as the 2014-lows in the 1.2113-1.2122 area. The SNB held its benchmark libor rate at near 0%, and vowed to maintain the minimum on EUR/CHF at 1.20. With a pending bearish breakout, there is downside to the low on the year and beyond. We should remain bearish until it approaches the 1.20 level, at which point we should consider a bullish scenario.
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