EUR/USD, USD/JPY: Where Should Pullbacks Hold? – BofAML

Bank of America Merrill Lynch FX Technical Strategy Research notes EUR/USD remains range-bound in the near-term, but could test upper end of range near 1.14-1.15

“A tactical YTD upside breakout on EURUSD (price of 1 EUR in USD) above 1.0829-1.0906 suggests near-term upside potential to the 2-year+ range highs near 1.1366 to 1.1495.

Pullbacks that hold above last weeks low near 1.1110 keeps the trend in favor of a test of the highs. The upper end of the weekly cloud and YTD pattern breakout point at 1.0979-1.0829 provide additional support,” BofAML argues.

Turning to USD/JPY, BofAML notes that the pair has corrected but has plenty of support near the 200-week MA, Fibonacci levels, and weekly Ichimoku cloud support in the 111.16-108.84 range.

“In our view, this bullish set-up favors a renewed move higher in USDJPY toward the downtrend line from mid 2015 and the late-2016/early-2017 peaks near 116.65 and 118.60-118.66, respectively with an eventual move push to the 2015 highs not ruled out.

Staying above the 111-108 range keeps this medium-term view intact,” BofAML adds. 

EUR/USD is trading circa 1.1250 and USD/JPY circa 110.50 as of writing. 

Source: Bank of America Merrill Lynch Rates and Currencies Research

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