EUR/USD, USD/JPY: Key Signals For Near-Term Direction - Citi, SocGen

The technical strategy teams at CitiFX and SocGen provide some insights on the current technical setups for EUR/USD, and USD/JPY noticing some key signals for their short term direction.

Citi: EUR/USD: Watch a weekly close below the 55 week moving average at 1.1036.

"Having failed at the top of the channel, EURUSD has moved back below supports around 1.1040- 1.1060 (December high and 200 day moving average) on a daily close basis.

We are also trading back around the 55 week moving average at 1.1036. A weekly close back below there would suggest that the underlying downtrend has likely re-established itself. Further weight would be given to that on breach of the channel base at 1.0914 

Weekly momentum is also beginning to turn lower from high levels

Support levels below the channel are at 1.0523 and 1.0458 which are the lows of the range we have been in for the last year," Citi argues.

SocGen: USD/JPY: S/T pause, break below daily hammer a sell signal.

"USD/JPY breached a multi-year upward channel and then confirmed a broad head-andshoulders pattern. It has achieved last September’s highs of 111/110, also an ascending trend since 2013. The projected target for the pattern is 106.

However, the weekly indicator is now closing in on multi-year graphical floor, suggesting the possibility of a short-term pause.

The formation of a daily hammer at 111/110 indicates that a break below will be needed to signal further acceleration of the down move.

A corrective rebound can’t be ruled out towards 114, the 76.4% retracement from the recent highs. The neckline at 116 remains a key resistance," SocGen projects.

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