Euro Crosses May Bounce Before Continuing Lower


EURAUD - Last week we wrote, “Coming under 1.6502 indicates that the bear trend has resumed,” and this is precisely what has occurred. The strong week of declines has left the pair near 2-month lows of 1.6196, with a break to eye the channel bottom at approximately 1.6140. Shorter term, the EURAUD looks extremely oversold on the hourly charts, with a bullish divergence in the MACD signaling a potential near-term bounce. The next resistance is seen at the 5/9 high of 1.6384, with a break to retest the 38.2% of 1.7043-1.6195 at 1.6515.

EURCAD - Last week we wrote, “The EURCAD continues to break down as the pair approaches the 200 day SMA (1.4895). The break below 1.5081 brings the 38.2% of 1.3496-1.5681 into focus. The 161.8% extension of 1.5688-1.5307 / 1.5509 is at 1.4895, the exact level of the 200 day SMA - which should be solid support.” Our outlook essentially remains unchanged, with a recent bounce off of significant support breaking a two-week trendline at approximately 1.5000. Next notable resistance is eyed at the next downward sloping trendline at 1.5200, while a break below 1.5000 would negate the short-term bullish scenario.

EURNZD - The EURNZD has turned up from the confluence of a support line drawn off of the 10/23/2006 and 1/23 lows / 61.8% of 1.6327-2 .1193, with a sustained bounce taking the pair to monthly highs through recent trade. The next significant resistance is eyed at the 38.2 percent retracement of 1.9496-1.8126 at 1.8648, with a break to challenge the confluence of spike-highs and 50% Fibo of the same trend at 1.8811. Coming below 1.8400 negates the short-term bullish scenario, with the pair likely to test the 61.8% of 1.6320-2.1195 at 1.8200.