EUR/USD Squeeze Not Finished; Time To Buy Gold - BofA Merrill

While Bank of America Merrill Lynch remains long term EUR/USD bears, their technical strategy team acknowledges that the the near term setup points to a further corrective squeeze higher.

"Gains should be limited to 1.0995/1.1098, but could extend as far as 1.1188 before topping and resuming lower," BofA projects.

"Below 6d trendline support (now 1.0685) says the downtrend has resumed for 1.0283 and potentially below," BofA adds. 

In contract, BofA is far more constructive on the AUD and NZD arguing that both are pointing to a medium term turn in trend.

"In AUD/USD, a close above the 50d (now 0.7835) confirms a turn targeting 0.8296/0.8264, while in NZD/USD a close above the 100d (now 0.7633 could confirm a 7wk Double Bottom, targeting 0.7978/0.8058," BofA projects. 

Tuning to Gold, BofA thinks that the completed, intra-day impulsive advance from 1143 (Mar-17 low) says the trend has turned bullish.

"NOW, its time to buy a dip. Pullbacks should not exceed the Mar- 17 low at 1143. Upside targets are seen to 1307/1345 and potentially beyond," BofA advises.

In line with this view, BofA runs a limit order to buy Spot Gold at at 1175, and to add at 1160, with a stop at 1142, and a target at 1307.

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