• Euro to stall by 1.4700
• Dollar/Yen setbacks limited
• Cable rally corrective
• Dollar/Swiss eyes 20-Day
EUR/USD – Setbacks appear to have stalled for now by the 20-Day SMA, with the market rebounding marginally on Wednesday thus far. However, we continue to contend that a short-term top is in place at a minimum, in favor of some deeper setbacks over the coming days to the 1.4400-1.4465 area. Ultimately, any rallies on Wednesday should be well capped ahead of 1.4700, with only a break back above 1.4730 giving reason for concern. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/JPY – We are skeptical with the early setbacks on Wednesday and do not see declines extending much below 89.30. Daily studies still show the need for a more significant healthy corrective bounce, and the strong bullish doji close on Monday reaffirms. As such, we recommend taking advantage of any pullbacks and looking for opportunities to buy on dips towards 89.30 in anticipation of an eventual break back above 90.35 and into the 91.00-92.00 area. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY
GBP/USD – While the recent H&S top that triggered in the previous week projects deeper setbacks over the medium-term to a measured move objective at 1.5000, we would caution bears with daily studies in the process of bouncing from oversold and more likely inclined to bounce some more ahead of the next downside extension. As such, selling into rallies back towards 1.6150 is the favored strategy on Wednesday. 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 establishing a close above the 20-Day SMA at 1.0375. A close above 1.0375 will be encouraging for bulls and open an acceleration of gains back towards 1.0500 over the coming sessions. STRATEGY: BOOKED PROFIT ON LONG FROM 1.0215 @1.0390 ON TUESDAY. STAND ASIDE FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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