• Euro bounces to range highs
• Dollar/Yen gains seen limited
• Cable expected to stall out
• Dollar/Swiss propped by 1.0500
• Sterling/Aussie buy @1.9075
EUR/USD – Remains well supported above 50-Day SMA for now and any pullbacks have been met with solid buying back into the familiar multi-day range between 1.4200 and 1.4400. While our bearish outlook for the pair is being tested at present, we continue to hold onto the idea that the market will eventually roll over and establish below the 50-Day SMA to force a shift in the structure. As such, any rallies above 1.4400 should be met with solid offers ahead of a resumption of declines. Only a sustained break above 1.4445 would give reason for pause. STRATEGY: STAND ASIDE; LOOK TO SELL
USD/JPY – With the overall trend still grossly bearish, we view the current corrective rally out from 91.95 as corrective and look for a lower top to carve out in the 94.00-95.00 area ahead of the next drop. The recent trend lows by 91.75 from mid-July have not been taken out just yet, and we look for a break below this level over the coming days to accelerate declines back towards the critical multi-year trend lows at 87.15. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD – Rallies should be limited to the 1.6500-1.6600 with the market in the process of attempting to carve out a major head & shoulders top on the daily chart that would ultimately project a measured move drop back towards 1.5000 over the medium-term. Look for a break below 1.6115 to help confirm bearish bias, while only back above 1.6700 gives reason for concern. STRATEGY: STAND ASIDE; LOOK TO SELL
USD/CHF – Continues to chop around within a very well defined multi-week range with the price currently residing at the lower end of the range. We like the idea of looking to keep playing the multi-week range with any breaks to fresh 2009 lows seen as limited. Ultimately, only a close back below psychological barriers at 1.0500 would give reason for re-think. Back above 1.0715 should help to reaffirm constructive outlook and accelerate gains to next resistance by 1.0835. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
GBP/AUD – The market continues to drop to post fresh +10 year lows on a daily basis. However, daily, weekly and monthly technicals are showing oversold and with the cross set to test some falling trend-line support off of the January 2009 lows just over 1.9000, wee see good reason for attempting a very playable counter-trend long position. We have incorporated out ATR analysis to ensure that entry will only be triggered on an overextended intraday move on Monday. STRATEGY: BUY @1.9075 FOR AN OPEN OBJECTIVE, STOP 1.8825. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY CLOSE (5PM NY TIME) ON MONDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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