Euro Rallies Towards 1.3000 Viewed As Formidable Sell Opportunity

• Markets finding support; but bounce more technical than fundamental
• Germany and France give risk supportive comments
• Looking to sell EUR/USD towards 1.3000 previous support zone

Risk correlated assets have managed a modest recovery in the early week, although the bounce is likely more attributed to a technical correction than anything truly fundamental. We have seen some optimism on the news of Germany and France saying they want to see Greece remain in the Eurozone, however, this is hardly the type of fundamental catalyst that would help to inspire legitimate bids. As such, we continue to recommend proceeding with caution. Our best strategy from here would be to look to sell the Euro on an additional jump to 1.3000 which now acts as solid previous support turned resistance.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD:The market remains under intense pressure and the focus for now is squarely on a retest of the 2012 lows from January at 1.2625. While we would not rule out a possibility of a test of this level over the coming sessions, short-term technical studies are correcting from oversold and are showing a need for some form of a corrective bounce from where a fresh lower top is sought out. Ultimately however, any rallies should now be very well capped by previous support turned resistance at 1.3000 in favor of additional weakness over the medium-term that projects deeper setbacks into the lower 1.2000's.

USD/JPY:The market continues to consolidate around 80.00 and is in the process of looking for a medium-term higher low ahead of the next major upside extension back above the yearly highs at 84.20 and towards 90.00 further up. However, for the time being it remains in question whether the market will still head lower towards the 200-Day SMA by 78.50 before ultimately reversing higher. The key level to watch above comes in by 80.60, and a break and close above this level will officially alleviate downside pressures and suggest that a higher low has now been carved in the 79.00's.

GBP/USD:The market remains under intense pressure since breaking back below 1.6000 and setbacks could now extend towards next key support in he 1.5600 area over the coming sessions. Still, daily studies are now stretched and we would prefer looking to sell into rallies towards 1.6000 where a fresh lower top is sought out.

USD/CHF:Overall the structure remains highly constructive and we continue to project additional upside over the coming months back above parity. For now, the latest break and close above 0.9335 is expected to accelerate gains for a retest of the yearly highs by 0.9600, while any intraday pullbacks should be very well supported ahead of 0.9200. Ultimately, only back under 0.9000 would negate outlook and give reason for pause.

--- Written by Joel Kruger, Technical Currency Strategist

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