[Jason_Lim]

EUR/USD – The slide in the EUR extended to the base of the bull channel this week but support held; while we contend still that the underlying technical trend higher remains in place, the rebound in the EUR from early week softness has been a little lame. The bull channel mid line is serving as resistance to the rebound and daily trend momentum has stalled. Still, moving average signals remain positively aligned and longer term measures of trend momentum remain unequivocally bullish at present. We suspect that the market may settle into something of a range in the short term as the market searches for direction. A move above 1.4925 remains key to opening up the topside for a move back above 1.50. A break under 1.4800 suggests that the market may have another look at the channel base. We expect still strong underlying support for this market and look for the EUR to remain above 1.4650/80.

USD/JPY – While the USD saw little significant downside follow through selling pressure after last week’s noted outside week reversal, USD rebounds have proven hard to sustain over the past few days. The short to medium term technical picture here remains negative for the USD and better selling interest into the end of the week suggests a test towards moderate short term support at 89.35/40 early next week. With the USD blocked above 92 last month, the main direction risk appears to be for a retest of the 88.00 long term support zone in the next few weeks. We see short term resistance at 90.90/00 and 91.50 early next week. Key, game changing, USD resistance stands at 92.30/35 currently.

GBP/USD – Cable remains in rather rude technical health on the face of it. Pivotal support at 1.6267, which we thought might be at risk, held this week’s test and the market has rebounded to test the top of the current trading range (possible bull flag) through the latter part of the week at 1.6634. With what could be construed as an inverse H&S continuation pattern forming up in the past couple of months (neckline in red at 1.6679), a push through the mid/upper 1.66 area in the next few days would signal another sharp leg up in the GBP. The H&S pattern suggests upside potential of almost exactly 10 big figures. While the market is perhaps not quite as short GBP as it was, we doubt that investors have acquired a significant long GBP position in the past week or so; the scramble to get long in the event of a break higher could be messy.