EUR/USD: meeting resistance
The up-trend has resumed and remains intact, however, it has reached a combination of the R1 monthly and the R2 weekly pivots at 1.3300 and 1.3287 respectively, where substantial resistance is expected to be exerted, probably forcing the pair to consolidate or perhaps even pull-back to the trend-line at around the 1.3250 level. Eventually the pair will probably break above these pivots, however, and rally up to an eventual upside target of 1.3405 where a major trend-line is situated. It is unlikely there will be a major breakdown but a decisive move below the trend-line at 1.3250 would probably lead to a fall to 1.3150.
USD/JPY: short-term trend in question
The direction of the short-term trend is in doubt after the breakdown out of the ascending channel. Although this has almost met its target at 98.40 it was a significant sign of weakness. Now the previous lows at 98.23 are the last real level of support remaining keeping any hope of a bullish recovery alive. If they are breached then we will have a change of short-term trend as a lower high and lower low will be in place. It is also true the exchange rate would quickly run up against robust support at 98.00 and 97.90 from the monthly and S2 weekly pivots respectively, however, these would probably only temporarily hold back the next wave down which would target the major trend-line at round 96.85– and at the beginning of August the monthly pivot will shift. The up-trend is compromised but as long as 98.23 remains intact there is the possibility of a recovery, although the 50-day MA at 99.30 will cap any upside initially.
Analysis By: Joaquin Monfort, Forex4you Analyst
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