24 Mar 2015
USD: Increased risk short term consolidation phase - JPMorgan
FXStreet (Bali) - A short term reprieve for the USD seems to be underway but medium term upside risks stay intact, notes Niall O'Connor, FX Strategist at JP Morgan.
Key Quotes
"After the struggling to extend above the next line of important resistance level, the setup for the broad USD picture suggests an increased risk that a short term consolidation phase is underway."
"Clearly, the post-Fed volatility highlighted the current overbought momentum and position extremes. Still, Thursday’s sharp recovery suggests the overall upside risks are intact with eventual new highs expected."
"While we have scaled back some our long USD risk, we continue to look for better levels and setup to add to the long USD basket."
"Importantly, the next line of key support levels has thus far contained the retracement. In this regard, the DXY effectively held the 96.00/95.53 support zone which includes the uptrendline and key retracement (38.2%) from the December low, as well as the former high from January and February breakout area. Given the strong confluence of support, this zone should now act as a short term floor."
Key Quotes
"After the struggling to extend above the next line of important resistance level, the setup for the broad USD picture suggests an increased risk that a short term consolidation phase is underway."
"Clearly, the post-Fed volatility highlighted the current overbought momentum and position extremes. Still, Thursday’s sharp recovery suggests the overall upside risks are intact with eventual new highs expected."
"While we have scaled back some our long USD risk, we continue to look for better levels and setup to add to the long USD basket."
"Importantly, the next line of key support levels has thus far contained the retracement. In this regard, the DXY effectively held the 96.00/95.53 support zone which includes the uptrendline and key retracement (38.2%) from the December low, as well as the former high from January and February breakout area. Given the strong confluence of support, this zone should now act as a short term floor."