The pair has been in a multiyear complex corrective downtrend since Jul’08. We prefer to view the setback from 1.4945 (May’11 high) as a wave (Y) of the large corrective pattern which is likely to retest the key swing low at 1.1870 on multi-month basis (a break lower is also possible). The rally from 1.2040 (Jul’12 low) could test the 1.3285/1.3485 resistance before reversing. A reversal below 1.2465/1.2300 would renew the bear trend. Medium-term downtrend view needs to be reassessed if the currency breaks above 1.3840 (61.8% retracement level).
The pair has failed around the strong resistance at 1.3140. The near-term downtrend could be a wave [c]. Daily MACD is about to trigger a sell signal. Downside focus is now on 1.2880/1.2835. A break below would refocus on 1.2735/1.2660. The 1.2975/1.3045 looks to cap strength now. A reversal above 1.3125 however retests the 1.3140/1.3170 resistance. A break below 1.2660 would extend the correction toward the 1.2590/1.2440 support zone.