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Flash: EUR confined to range last week - BBH

FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the euro was confined to the previous week's trading range and chopped around a roughly $1.2820-$1.3000 trading range.

They see that the technical indicators we look at favor an initial upside break of this range and additional resistance is seen in the $1.3020-40 area, which corresponds to retracement objectives and the 20- and 200-day moving averages. If this is overcome, they feel that there is potential toward $1.3200.

Additionally, they note that the euro has held support near JPY130 and the measuring objective of the triangle pattern carved out mid-April through mid-May is near JPY135 and provided the JPY130 area hold, they see that that this remains a reasonable target. On the other hand however, they feel that a break of JPY130 could be part of a large short squeeze on the yen another 1-2% decline for the euro.

The upticks may have to be fought for as many anticipate a refi rate cut next month and there is speculation that a negative deposit rate may be introduced then. They write, “With EONIA trading around 5 bp, another 25 bp rate cut remains more in the symbolic world than substantive. We continue to believe that the ECB will be persuaded that the cost (somewhat unknown) is greater than the benefits (elusive) of a negative deposit rate.”

Flash: USD/JPY still projected to reach 110.00 by year-end – UBS

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