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TECHNICAL UPDATE
With the USD maintaining a heavy tone following last week’s poor performance, the focus stays on the next line of
important support levels which should define whether a deeper corrective phase is underway. In this regard, the
focus stays on the DXY and JPM USD Index as key near term levels remain well-defined. The follow-through
weakness for the DXY after failing at key initial resistance in the 98.45/70 zone has led to a push below the
96.75/65. In turn, a closer test of the important 96.33/17 range lows is expected. Moreover, note the JPM USD
Index sees important support at the 96.00/95.90 short term range lows. Violations here should confirm a deeper
short term corrective phase. For the individual pairs, we also see an important test as the bounce in EUR/USD from
the 1.0660/20 support zone shifts the focus to near term resistance starting at the 1.0925/60 zone with breaks
allowing for a closer test of the range highs near 1.1053/65. Again, this area should define whether a more
sustained corrective phase is underway. The late week decline for USD/JPY shifts the focus back to the 118.52/00
support zone which includes the March low. Breaks should confirm a deteriorating setup and risk of a deeper
pullback. Note the 120.10/85 levels remain key resistance and should help define a retest of the March peak. With
regards to the commodity currencies, yesterday’s outperformance turns the focus to the next line of key levels. For
AUD/USD, the push through key initial resistance in the .7844 area (mid-April high) suggests a closer test of the
more important .7939 March peak and short term range highs. Again, this area will define whether a deeper
corrective phase can develop. Despite last week’s pullback, yesterday’s bounce in NZD/USD highlights the
importance of the .7520/7495 support zone (March uptrendline). Above the .7665/70 breakdown area from last
week would shift the focus back to the .7742/57 zone which includes last week’s high. The heavy price action for
USD/CAD continues to develop following the breakdown below 1.2350 range lows as the focus turns to the
important 1.21/1.19 support zone (38.2% retrace from Nov/July, BoC breakout area from Jan) and where some
retracement is due.