Short Term FX Technical Strategy (July 8, 2022)

EUR/USD – Downtrend Remains Intact

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Since our last report dated July 5, 2022, EUR/USD has broken below the medium-term pivot support at 1.0350 which invalidated the corrective bounce scenario for an extension of its sequence of impulsive bearish movements and reached the 1.0200 support/alternative target scenario (printed 1.014 intraday low on 8th July).

The short-term downtrend from the June 27, 2022 high remains intact. Watch key short-term resistance at 1.0270 for another potential downside step towards support at 1.0060 initially (lower boundary of the descending channel of February 11, 2022 and a group of Fibonacci extension levels).

On the other hand, an hourly close above 1.0270 invalidates further decline for a slight corrective bounce towards next resistance at 1.0350/1.0400.

GBP/USD – Elements Turned Bearish

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Short-term bearish momentum has resurfaced, as indicated by the hourly RSI oscillator which pulled back from key corresponding resistance at the 60% level after a challenge above it.

Move from a neutral to a bearish bias below key near-term resistance at 1.2200 for a potential drop towards support at 1.1850 initially. However, a breakout with an hourly close above 1.2200 invalidates the bearish scenario of a corrective tightening towards next resistance at 1.2410/2460 (also the 17th June 2022 minor high).

USD/JPY – Maintaining bullish bias above key support at 134.80

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Since our last report dated July 5, 2022, USD/JPY has traded sideways above key short-term pivot support at 134.80 in a bearish reversal “Ascending Wedge” pattern.

No change in our opinion; Potential near-term residual upside move for USD/JPY as the steep and rapid rally from the March 5, 2022 low nears a point of exhaustion to inflict a potential trend phase break major bullish run in place since the January 5, 2021 low where a multi-week corrective decline streak could materialize next.

Continue to watch key short-term support at 134.80 for a potential push towards resistance at 137.20/50 (upper boundary of the “rising wedge” and a group of Fibonacci extension levels).

On the other hand, a breakout with an hourly close below 134.80 initiates a multi-week corrective downside scenario for a drop to the next support at 133.60 initially.

AUD/USD – Turning Neutral on Broad USD Strength

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No conviction to maintain the bullish bias as indicated in our previous report dated July 5th, even though AUD/USD is still trading above the key short-term support of 0.6760 previously highlighted.

Given the broad-based strength of the USD against major currencies seen over the past three days, the chances of a short-term corrective rebound scenario for AUD/USD have diminished.

So prefer to go neutral now between 0.6890 and 0.6760. Only a breakout with an hourly close above 0.6890 restarts the corrective bounce towards 0.6990 with an upper limit at 0.7065. On the other hand, a breakout with an hourly close below 0.6760 triggers another sequence of impulsive bearish moves towards the 0.6670/6640 support (also a group of Fibonacci extension levels) in the first leg. .

Timestamp: July 8, 2022 at 2:15 PM SG

Source: CMC Markets