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24 Jun 2013
Flash: Pre FOMC highs for EUR and GBP are technically significant - BBH
FXstreet.com (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman believes that technically, the highs the euro and sterling recorded before the FOMC announcement are significant.
He begins by noting that they mark the end of the correction off the year's lows set in late March by sterling in early April by the euro. Further, the euro overshot by a little the 61.8% retracement of the decline seen from the start of the year, while sterling stopped a little shy. He sees that both upside corrections unfolded in a three-leg sequence, which is common for counter-trend moves.
Chandler believes that the correction is over and the dollar's underlying uptrend is resuming, and while there is some risk of near-term consolidation, he expects the dollar to make new highs for the year against the European currency complex. He writes, “Recovery upticks in the euro will likely be capped in the $1.3220-60 range, while sterling's bounce will likely be limited by the $1.5500-50 area. On the downside, the next target for the euro is $1.3060 and then $1.2975. The trend line drawn off the early April and mid-May lows comes in near $1.2850 at the end of next week.”
He begins by noting that they mark the end of the correction off the year's lows set in late March by sterling in early April by the euro. Further, the euro overshot by a little the 61.8% retracement of the decline seen from the start of the year, while sterling stopped a little shy. He sees that both upside corrections unfolded in a three-leg sequence, which is common for counter-trend moves.
Chandler believes that the correction is over and the dollar's underlying uptrend is resuming, and while there is some risk of near-term consolidation, he expects the dollar to make new highs for the year against the European currency complex. He writes, “Recovery upticks in the euro will likely be capped in the $1.3220-60 range, while sterling's bounce will likely be limited by the $1.5500-50 area. On the downside, the next target for the euro is $1.3060 and then $1.2975. The trend line drawn off the early April and mid-May lows comes in near $1.2850 at the end of next week.”