Société Générale say EUR/USD is probing the multi-decade channel support and is now tantalisingly close to the lower bound of the broad consolidation zone at 1.0540/1.0465.
The pair has been witnessing a slow drift recently and if the aforementioned support levels give way, EUR/USD will face a further downtrend towards the descending channel limit and projections at 1.0180/1.00.
Ongoing consolidation within wide limits of 1.0540/1.0465 and 1.1360/1.15 resembles the one seen back in 2000/2002 when the pair experienced similar choppy up/down-swings.
So long as 1.0540/1.0465 holds, EUR/USD is likely to undergo a slow recovery towards the median of the range at 1.0860 initially. Once this is surpassed it could challenge the upper bound of the zone.
For USD/JPY
As was the case in 2000-2002, USD/JPY has indeed experienced a dramatic recovery after testing key graphical levels at 100. The formation of a Bullish Engulfing and Double Bottom project objectives near 116 with the potential to test 119.50.
Despite the accelerated rebound, we view this as corrective as the pair is close to achieving important retracements for a previous downmove in price as well as time terms and a temporary high is likely in 1Q17.
In the event of persistent bullish momentum, the next key hurdle will be at the multi decade descending trend near 123/125.
