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Forex Flash: Overall upside risks for the USD are intact - JP Morgan

FXstreet.com (Barcelona) - The technical outlook on the USD has improved following broad-based strength, violation of key resistance levels and renewed trending bias, says John Normand, head of currency strategy at JP Morgan.

"While the short term setup is overbought and the proximity of the next line of key levels argues for some pause, the overall upside risks for the USD are intact" John said. In the report, which was sent out to customers last May 17, John argues that the initial focus is on the 2012 highs for the DXY, a level that was penetrated righ after the report was written.

The upside resolution in the USD index "shifts now the focus to the 84.90/95 area which includes the 76.4% retracement from the 2010 cycle peak before deeper targets near 85.50/85.60" John added.

John's view coincides with FXstreet.com supply/demand analysis, in which it was concluded that the DXY "remains well supported by series of demand layers, now set to appreciate further eyeing 85.00 round ahead of 85.30-60, next major supply."

John sees key support at the early-May breakout near 82.50, with 81.70/81.33 May lows still viewed as a short term floor.

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