Bank of America Merrill Lynch (NYSE:BAC) recommend its clients to sell EUR/USD to hedge for a Brexit scenario. Merrill Lynch argues that Fed has to hike rates in the improving global economic situation while the ECB will not stop doing QE easing before it reaches the goals for inflation. Merrill also expects EUR/USD to depreciate below 1.10 before June and they are targeting parity by the end of the year. Current high levels in EUR/USD are seen by Merrill a good opportunity to sell EUR/USD ahead of Brexit referendum.
EUR/USD
Seen from the Chart H1, EUR/USD has been in the correction at high level for a while but the range keeps narrow. We cannot say that “ the bullish momentum is strong” in this case. Therefore, we mainly continue to be bearish and be put option buyers during the daytime session. Not to be bullish until the price breaks above 1.1430. (HKT)
Support: 1.1352/1.1308 Resistance: 1.1407/1.1430
GBP/USD
Seen from the Chart H1, GBP/USD may form a small bottom divergence but the bigger trend continues to be bearish. We are mainly put option buyers during the daytime session overall. Call options can be first purchased with caution in the morning session. (HKT)
Support: 1.4100/1.4050 Resistance: 1.4200/1.4250
USD/JPY
Seen from the Chart H1, as USD/JPY needs a rally correction, call options can be purchased in the morning session before the 111.00 resistance level.(HKT)
Support: 110.00/107.60 Resistance: 111.00/111.50
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