• Euro testing 20-Day SMA
• Dollar/Yen upside seen
• Cable looking oversold
• Dollar/Swiss to 1.0500
EUR/USD – Remains under pressure into Tuesday with the market considering a close below next key moving average support in the form of the 20-Day SMA at 1.4575. Below 1.4575 will open a deeper setback towards inter-day support at 1.4465. For now, a lower top is sought out below 1.4720, with any rallies intraday seen well capped ahead of this level. Overall, there is plenty of room for additional weakness from here, and only a break back above 1.4720 would delay short-term bearish outlook. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/JPY – Saw some intensely volatile price action on Monday with the market dropping sharply to 88.25, before a jackknife reversal into the close back to opening levels at 89.65. This has set up a very bullish hammer-like formation with the price action now likely signaling a short term bottom ahead of some fresh upside over the coming days. Look for today’s break back above 89.85 to provide additional confirmation with an upside extension likely extending to a minimum objective by 92.00. Back under 88.25 negates however and exposes the critical matched trend lows from late 2008/early 2009 by 87.15. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY
GBP/USD – The technical break of the major head & shoulders neckline by 1.6000 in the previous week has been showing some solid follow through thus far with the market trading as low as 1.5770. Ultimately, the pattern formation projects deeper setbacks over the coming days to a measured move objective at 1.5000, but we would caution bears with daily studies now oversold and more likely inclined to bounce a bit ahead of the next downside extension. As such, selling into rallies back into the 1.6100-16200 area is the favored strategy. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/CHF – Looks like it could be in the process of carving out a base after dropping to a fresh 2009 low by 1.0185 in the previous week. The market has since broken back above 1.0300 and now has its sights set on next resistance by the 20-Day SMA at 1.0390. A close above 1.0390 will be encouraging for bulls and open an acceleration of gains back towards 1.0500 over the coming sessions. We are long from 1.0215 and have trailed our stops to cost to eliminate any risk on the trade. POSITION: LONG @1.0215 FOR AN OPEN OBJECTIVE; REVISED STOP 1.0215.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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