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Asian FX Update
A resumption of some dollar weakness is being seen in Asian trading - the conclusion of Golden Week in Japan appears to have breought out the bulls on JPY and the Nikkei. With USD/JPY under 120.00, we may see some further weakness in this pair. This will put some pressure on EUR/JPY too and might see it test the critical 162.90-163.00 bull trend-line from the March 5th swing low.
The Dollar Index (DXC) is also testing some key support at 81.61 but with the 240-min and 60-min chart quite 'oversold' we may see a modest bounce higher before the move lower resumes. Keep an eye on the 10-year Treasury yield as it has been very closely correlated with moves in DXC lately. A break below 4.6250% - 4.6074% would be bullish for bond prices but would likely see DXC trade lower.
GBP/USD seems poised once again to make a run at the 2.0000 level. A break above 1.9970 will likely ignite some bullish momentum while 1.9855-70 remains solid support.
EUR/USD - holds above near-term support at 1.3587 with all eyes focused on the 1.3685 level.
We think GBP will outperform EUR over the next few days and are looking to short EUR/GBP as a way to play that 'relative strength' scenario. A break below .6800 will make this trade more interesting from a technical perspective.
Dave
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