TECHNICAL OUTLOOK

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EUR/USD:The recent break back above 1.3500 has signaled a shift in the short-term structure and opened a move through latest topside resistance by the 61.8% fib retrace off of the Nov-Jan high low move at 1.3740. Next key topside resistance comes in by 1.3785, while above exposes the 78.6% fib retrace off of the same move at 1.3980. Overall however, our core bias remains net USD bullish and as such, rallies to 1.3985 this week will be aggressively sold. In the interim, a break and close back below 1.3710 will be required to relieve immediate topside pressures. Thursday's break below 1.3640 is encouraging to end a sequence of 7 consecutive daily higher lows, but will need to see a close below Wednesday's close at 1.3710 to set up a bearish outside day.

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USD/JPY: The market appears to be locked in some consolidation with clear directional bias not easily determined. The latest rally has stalled out by the Ichimoku cloud top to suggest that the pressure still remains on the downside for now. Back below 82.00 should accelerate declines and expose the multi-year lows from 2010 just ahead of 80.00, while back above 83.70 will relieve downside pressures and shift structure back to the topside. In the interim, we remain sidelined and await a clearer signal.

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GBP/USD: A major bearish reversal day on Tuesday could now confirm a fresh lower top in place by 1.6060 ahead of the next downside extension. Tuesday's break and close back below 1.5840 helps to strengthen bearish bias, and from here, we look for any intraday rallies to be well capped ahead of 1.6000 in favor of a drop towards next support by 1.5750. Only back above 1.6060 negates.

TRADE OF THE DAY

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USD/CHF: Overall price action is certainly concerning for our longer-term basing outlook with the market dropping to fresh record lows by 0.9300 thus far. However, cyclical studies are showing oversold and any additional declines below 0.9300 are not seen as sustainable. Look for the current setbacks to be well supported on a close basis above 0.9400 (see 78.6% fib of record Dec low to Jan high), with a fresh higher low sought out ahead of the next major upside extension beyond 0.9785. POSITION: LONG @0.9445 FOR AN OPEN OBJECTIVE; STOP 0.9295.

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Written by Joel Kruger, Technical Currency Strategist

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