• Euro stops averted for now
• Dollar/Yen ready for 87.15
• Cable consolidates
• Dollar/Swiss bounces off 78.6
EUR/USD – Rallies have stalled out by the 78.6% fib retracement mentioned in Tuesday’s commentary and a lower top is now sought out by Tuesday’s high ahead of the next downside extension back below 1.4500 over the coming days. However, inability to roll over from here, will negate our bearish outlook, with a break back above 1.4760 to open a retest of the recent 2009 highs by 1.4845. Above 1.4845 then exposes the 1.5000-1.5200 area. POSITION: SHORT @1.4625 FOR AN OPEN OBJECTIVE; STOP 1.4775.
USD/JPY – Any hopes for a short-term base are being wiped away on Tuesday, with the market breaking back below 89.00 to put the focus on a retest of key short-term support at 88.25. A break below this level will expose a retest of the major 87.15 matched trend lows from late 2008 and early 2009. A break back above 90.00 will now be required at a minimum to take pressure off of the downside. [B]STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL
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GBP/USD – The market is in the process of a bearish consolidation with the more likely outcome from here, an eventual drop back below 1.5770 to open a fresh downside extension towards 1.5000 over the coming weeks. However, with the USD still broadly offered across the board, we cannot rule out the possibility for an upside break of consolidation through 1.6130, back towards the 1.6400-1.6500 area. [B]STRATEGY: STAND ASIDE FOR NOW; AWAIR CLEARER SIGNAL
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USD/CHF – Has been pulling back quite sharply since rallying to 1.0455 in the previous week. We had been looking for a major base by the recent 2009 low at 1.0185, but this is now in jeopardy with the market currently trading back into the 1.0200’s. The 78.6% fib retrace off of the 1.0185-1.0455 move comes in by 1.0250 and this level represents the last chance for the recovery. Any sustained break below 1.0250 will inevitably open a retest of the 1.0185 yearly lows and potentially parity further down, while back above 1.0325 on Wednesday is required to take the pressure off of the downside. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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