As one month draws to a close and another one commences, it is time to look at the charts.
The team at Bank of America Merrill Lynch highlights two interesting patterns:
Here is their view, courtesy of eFXnews:
Across currencies, the USD continues to outperform, notes Bank of America Merrill Lynch.
In this environment, BofA is bearish AUD/USD and NZD/USD.
“However, we reiterate our view that AUD/USD downside should prove limited, with the confluence of support between 0.7378/0.7331 (14-year channel base and 10m channel base) likely to provide the building blocks for a long-term base and turn higher,†BofA argues.
“In contrast, NZD/USD has significant downside potential. While 0.7000/0.6955 should hold initially, long term, it could fall to the 200m avg. at 0.6588 and potentially as far as 0.5788/0.5631,†BofA adds.
Given this backdrop, BofA reiterates its bullish AUD/NZD view.
“The impulsive advance from 1.0020 says that the long-term trend is turning bullish (ultimately targeting 1.3566). Dips are corrective and should be limited to 1.0566/1.0357. A break of intra-day channel resistance at 1.0750 says the correction is over and that the long-term uptrend is resuming. We would look to buy that break.,†BofA projects.
Finally, BofA remains long and bullish USD/JPY.
“While 124.16/124.59 may provide initial resistance, we expect the zone to give way for a push toward 128.45. As such, we recommend staying long for continued gains through 124.59 to 128.45,†BofA advises.
For lots more FX trades from major banks, sign up to eFXplus
By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.
