EUR/JPY bearish short-term bias after reversing near top of medium-term range
EUR/JPY continues to trade in its 3-month range but in the short-term, the bias is bearish after the pair failed to break out of the top of the range at 134.50. There is limited upside in the near term and risk remains tilted to the downside as the RSI is bearish.
Looking at the 4-hour chart, the market became overextended before reversing, as indicated by the RSI reaching over 70. The drop from 134.47 resulted in falling below the 20 and 50-period moving averages into the 132 handle. Prices have stabilised near 132.50 but with a bearish RSI, the odds are high for continued downside momentum.
A daily close below 132.50 would yield significant additional weakness to set EUR/JPY on the path towards 131.50. Breaking the base of the medium-term range and below 131 would shift the longer-term trend to a more bearish one.
In the short term, a deeper pullback towards 132.50 is possible while RSI is bearish and the 20-period MA is falling. The medium-term range is expected to remain intact between 131.50-134.50.
AUD/USD neutral in near term; bearish market structure intact
AUD/USD has turned increasingly bearish as the pair continues to trade below its 200-day moving average and has retraced more than half of the rise from 0.7328 to 0.8124. Prices are now close to the lowest level in six months.
In the near term, the market is in a consolidation phase, capped by the 61.8% Fibonacci retracement level at 0.7631. AUD/USD needs to rise above this resistance level to ease immediate downside pressure. The 50% Fibonacci at 0.7725 is a strong resistance as well and a break above this area would indicate the start of a more sustained recovery with scope to target the key 0.7900 level and then the psychological at 0.8000. A re-test of the 0.8124 peak could set the AUD/USD on the path for a resumption of the May-August uptrend.
A breach of the 0.7531 low would make AUD/USD more vulnerable and weak with increased odds to fall through 0.7460 to reach 0.7328. Such a move would strengthen the bearish outlook.
Th RSI has no clear direction now and is pointing to more range trading in the near term. The overall market structure remains bearish as long as prices remain below the 200-day MA, with a high probability of AUD/USD continuing its downward trajectory.