For the uptrend to be violated, EURUSD would need to close below 1.5730. As that has not been the case, we see current price action as consolidation rather than a trend change. The current lull looks to owe itself to looming event risk, with ISM Manufacturing data due tomorrow and Nonfarm Payrolls on Friday. As the docket clears, we see a return to upside momentum eyeing a test of the psychologically significant 1.6000.
[B]
EUR/USD[/B]
[B]Strategy: Bullish at 1.5730, Targeting 1.6000[/B]
Last week, EURUSD rose from support near 1.5340, a level where an upward-sloping trend line and the 61.8% Fibonacci retracement of 1.4439 –1.5900 rally intersect. The ascent was once again capped at 1.5900, last week’s target level. The pair now finds itself range-bound between the highest close of the previous bullish run near 1.5730 and the 1.5900 double top. For the uptrend to be violated, EURUSD would need to close below 1.5730. As that has not been the case, we see current price action as consolidation rather than a trend change. The current lull looks to owe itself to looming event risk, with ISM Manufacturing data due tomorrow and Nonfarm Payrolls on Friday. As the docket clears, we see a return to upside momentum eyeing a test of the psychologically significant 1.6000.
[B]
GBP/USD
Strategy: Flat at 1.9800, waiting for confirmation[/B]
Last week, we saw sterling resume the bullish run, rallying from trend line support to reach our target of 2.000. Liming our upside here proved wise - GBPUSD put in a top closely nearby at 2.0090, the 61.8% Fib of the 12/12/07 – 01/22 decline. The pair has since declined all the way back down to close below trend line support. The last remaining hurdle remains at the 38.2% Fibonacci retracement level found near 1.9800. Should GBPUSD close below that, the path is clear for downside as low as 1.9330. We will opt to stay on the sidelines for the moment, waiting to see how price action reacts at Fib support.
[B]
USD/JPY
Strategy: Flat at 100.00, waiting for confirmation[/B]
USDJPY has done little since putting in a bottom at the 161.8% Fibonacci extension of the 117.90 – 104.84 down move. Last week’s price action was marked by a tight range between 100.70 and 98.50. With most recent US data shifting from “bad” to “mixed”, the current lull makes sense with traders holding out for ISM and NFP this week before committing to any directional moves. That said, the USDJPY has seen close correlation to stock indices and overall risk sentiment in recent months. The latest monetary easing by the Fed has been seen as accommodative, suggesting the pair has scope to move up higher as jittery markets calm their nerves. Though we remain on the sidelines at the moment, our bias leans bullish. We will look for a close above 100.70 to go long, targeting a return to 105.
[B]
USD/CHF
Strategy: Bearish below 0.9840, Targeting 0.9640[/B]
Having concluded a bout of greenback strength, the USDCHF paused at the 61.8% Fibonacci retracement of the 1.1108 – 0.9647 decline near 1.02. Our bearish bias has been validated, though the pair failed to revert all the way the wick low at 0.9640. Presently, the pair has found support just above 0.9840, a level corresponding with the 3/17 close, a record lowest. Our bias remains bearish in the near term. As with the EURUSD, the threat of major US data presents an event risk that should USD bears from picking up significant traction. Once the docket clears, we expect the down trend to resume.
[B]
USD/CAD[/B]
[B]Strategy: Bearish against 1.0250, Targeting 0.9860[/B]
The loonie has perpetually ignored the other majors, remaining range-bound while the others swung fantastically to record levels. Though it briefly peaked above the range top at 1.0249 in January, the move turned out to be a head-fake: USDCAD promptly fell back into familiar territory, bracketed on the bottom by the 38.2% Fibonacci retracement of the 0.9055 – 1.0249 rally. Last week, the pair began a decline from the same, familiar resistance but was stopped short. A second Fibonacci retracement drawn from the 01/22 false break top along the decline to the range bottom places a 61.8% retracement level at 1.0121. USDCAD spent last week bound to this smaller sub-range and now finds itself at the top yet again. With no significant evidence to contend a change in the range bound dynamic, our strategy remains to short the pair back down to established support level.
[B]
AUD/USD
[/B]
[B]Strategy: Bullish against 0.9119, Targeting 0.9500[/B]
As we suggested last week, the AUDUSD bounced from support at the long-term trend line established on 08/17/07 to take out the 61.8% Fib of the 01/22-02/28 rally at 0.9119. The pair stalled after testing the 0.9200 level, following the other majors in a mild easing of dollar weakness. Currently resting above 0.9119, AUDUSD looks poised to resume upside momentum as the calendar moves past ISM and NFP event risk. We remain bullish, eyeing a re-test of the double top at 0.9500.
[B]
NZD/USD
[/B]
[B]Strategy: Bearish against 0.7900, Target TBD [/B]
The Kiwi dollar’s decline has penetrated the 38.2% retracement of the 0.7380 – 0.7897 rally, accelerating downward. Looking ahead, significant support levels remain at 0.7799 and 0.7702, the 50% and 61.8% Fibonacci retracements of the same rally. Our bias has shifted to from neutral to bearish below 0.7900, though we will hold off on locking in a target as we monitor future price action at the aforementioned Fib support levels.
[I]To reach Ilya with comments regarding this or other articles he has authored, please email him at <[email protected]>.[/I]