Bank of America Merrill Lynch FX Technical Strategy Research notes that Tuesday was EUR/USD’s largest up day in just over a year rising 1.4%.
“By comparison, on June 3rd 2016 the EUR/USD rallied 1.94% after disappointing US NFP data. However this time the rally was driven by comments from Mario Draghi and seemingly unrefuted by comments from Fed chair Janet Yellen.
EUR/USD is now trading above the high made during the 2016 US presidential election with a few higher and memorable 2016 highs remaining The consolidation between 1.11-1.13 initially felt toppy, however the trend has continued higher,” BofAML argues.
BofAML points to EUR/USD support levels around 1.1280, 1.1195, and to resistance levels around 1.1425, 1.1535.
Turning to EUR/JPY, BofAML notes that the cross rallies to key pivot zone and may exhaust first EUR/JPY appears susceptible to a technical pullback before a continuation to the 200wk SMA can follow.
Historically, the 127’s has been a tough area for EUR/JPY to trend through. Market action rejected this area four times in 2016. A countertrend signal from TD Sequential and overbought RSI creates some doubt of an immediate break out,“ BofAML adds.
BofAML points to EUR/JPY support levels around 125.75, 123.60 and to resistance levels around 127.90, 129.60.
Source: Bank of America Merrill Lynch Rates and Currencies Research
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