TD Research thinks that the market’s reaction to the July FOMC was overdone as markets used this as an opportunity to push several majors through key technical levels.
“We are not convinced this is the break that investors should be chasing. Our sense is that markets—to a large extent— have traded under the narrative of a benign inflation/Fed outlook, which has also been exacerbated by frustrations in Washington. As such, we think the market is irrationally keen to jump on any excuse to add to EUR longs.
While we are strategic USD bears/EUR bulls, the reluctance for several USD-pairs to sustain key breaks is telling and may signal momentum is near an exhaustion point,” TD argues.
“In EURUSD, key supports lie in the 1.1600/20 area; an appreciable break below this should signal a washout towards 1.13, at which point we would reassess risk/reward of renewed EUR longs.
In AUDUSD, 0.7800/35 are key supports, below which a flush towards 0.76 would look more complete. Next week’s RBA meeting is a key event risk as we will likely get a better perspective of their pain threshold for AUD strength,” TD adds.
Source: TD Securities Research
The article is published by one of the foremost sources of Forex trading information. Link to the original article above.
from Online Forex Trading Resource
View thesource article here