The US Dollar is finally ready to be bought against the Euro after as the long rally from early March is at last exhausted. The other major currencies look certain to follow in the days ahead as the greenback prepares to dominate forex markets once again.
[B]EUR/USD[/B]
[B]Strategy: Short at 1.3936, Targeting 1.2454[/B]
Last week, the EURUSD followed up a Dark Cloud Cover bearish reversal formation with a confirmed break of support at the lower boundary of a rising channel that had confined the latest upswing from late April. We entered short at 1.3936 initially targeting the previous swing bottom below 1.30. Importantly, this will be a “soft” target, meaning we will look for this to be the next important juncture but refrain from setting a firm take-profit order at this level, looking for the pair to sink substantially lower to break below the double bottom at 1.2454. A stop-loss will be activated on a daily close above the 06/03/09 wick high at 1.4340.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
[B]GBP/USD[/B]
[B]Strategy: Pending Short[/B]
The Pound is showing signs of an established double top below 1.6670 with a decisive Three Black Crows bearish reversal candlestick pattern. Prices are now testing below resistance-turned-support at the upper boundary of a previously broken rising channel. We will look for a daily close below this juncture (now at 1.5954) to enter short, aiming for another test of the double bottom at 1.3731.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY[/B]
[B]Strategy: Flat[/B]
USDJPY has broken out of a falling channel that had guided prices lower since early April. That said, we are going to hold off on taking a short position at current levels. A looming reversal looks to be ahead on global stock markets and it remains to be seen which of the two safety-linked currencies (US Dollar, Japanese Yen) ends up seeing relative strength as risk aversion returns into play. Rather, we will remain on the sidelines for the time being as the fundamental catalysts behind the pair are clarified before acting on what is shaping up to be a bullish bias.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CAD[/B]
[B]Strategy: Pending Long[/B]
USDCAD looks to be finding a bottom having put in a Bullish Engulfing at 1.0789, a level that previously acted as significant resistance in September 2008. Still, prices remain within the confines of a falling channel established from in mid April. We will wait for confirmation on a conclusive daily close above the channel’s upper boundary (now at 1.1275) and enter long, targeting a return to test triple top resistance at 1.30.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD[/B]
[B]Strategy: Pending Short[/B]
AUDUSD has put in a decisive Bearish Engulfing and is now testing the last layer of support at the bottom of a rising channel that has guided the pair since mid April. As with USDCAD, we will look for a definitive close beyond this hurdle (now at 0.7945) to enter short, aiming for a decline below the previous swing bottom at 0.6950.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]NZD/USD[/B]
[B]Strategy: Pending Short[/B]
As with its Australian counterpart, NZDUSD is turning lower and setting up an imminent selling opportunity. Prices are on pace to test the bottom of a falling channel at 0.6110 having rebounded from support-turned resistance at 0.6565. A daily close below this level will expose a selling opportunity to target the previous swing low at 0.4913.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
** Stop-loss orders are activated on a daily close breaching the specified price level.
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