The euro touched 1.2940 on Monday but failed to maintain the gains, edging lower to 1.2875 area. The 1.2935/40 area remains a critical resistance on the daily charts and is a breakout level on the NY closing charts. A closing NY break above 1.2935 will be extremely bullish for the euro, opening the way for a sustained rally to 1.3030, then the April ’05 high of 1.3125. More resistance is seen following a break above 1.3125 targeting 1.3460 to 1.3580 area. On the other hand, failure to clear 1.2940 will force the euro back to its near-term support base of 1.2810, with more support seen at 1.2750 and the three-time low of 1.2715, which are expected hold and maintain the 1.27-1.29 range.
USD/CHF: The 1.2195 low touched on Monday is a very strong intra-day support level while the 1.2220 is a strong NY closing chart support. Failure by the dollar to break below these levels will yield to a strong rebound targeting 1.2360/70, then beyond 1.2410 to 1.2445. More resistance is seen at 1.2500 to 1.2540. On the other hand, if the 1.2195 is given, then brace for more dollar weakness to 1.2082 then the May and Jun ’06 low of 1.2020, with more support seen at 1.1920.
USD/JPY: The dollar is approaching mega-resistance level of 116.40, which is a very strong resistance on the daily charts and a three-time top on the NY closing charts. Selling the dollar at 116.40 is suggested with stops above 116.80 to protect against an adverse move to 117.60, the next formidable resistance level. If the 116.40 is seen and the stop is not triggered, then brace for a swift move to 115.15, then following a break below 114.80 to target 114.55 to 114.00. More support is seen at a previous low of 113.45.
GBP/USD: Sterling hit our cross targets of 2.3440 and 220.50 on the crosses against CHF and JPY while against the dollar it also touched a new record of 1.9100, after which it corrected due to profit taking. We still expect sterling to outperform because of its yield advantage and see possible dips to 1.8860 and more importantly 1.8775 as good opportunities to establish new strategic long positions. A break in the meantime above 1.9025 is needed to open up the range for a test of 1.9145, and subject to a break above 1.9170 open the way for a move on the next target of 1.9260/1.94.
Disclaimer: The recommendations on this page are for indication purposes only and the Financial Mirror does not take any responsibility for investment action taken on the above. Always consult a professional before investing.
