The market was unable to extend Monday’s powerful gains yesterday with
demand stalling near 1.3700. Although initial downside found buying
interest, the highs were not maintained. The net unchanged close
highlights a degree of investor uncertainty but gradually lower intraday
highs give the immediate outlook a mildly negative bias. In view of
this our call is Cautiously Bearish below 1.3685. The immediate
objective is 1.3610 with a move beneath that point targeting 1.3565,
yesterday's bottom, or even towards 1.3516, half of Monday’s net upside.
The risk to this call is that selling pressure is weaker than currently
assessed although a fresh outright bullish signal would only be
generated by a move through 1.3685, yesterday's peak. Prices and
sentiment should then improve to 1.3701, this week's top, then 1.3747.
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