The US Dollar has remained under pressure, narrowly avoiding a break to new lows against major currencies last week as risk trends unexpectedly lost their potency in driving price action. We remain long the greenback against the Euro, British Pound and the antipodean currencies as it struggles to find firmer footing.
[B]EUR/USD[/B]
[B]Strategy: Short at 1.3936, Targeting 1.2922[/B]
[B]Weekly Profit / Loss: [/B][B]-110 pips[/B]
We sold EURUSD at 1.3936. The pair has broken out of the range that we indentified last week and is now testing support-turned-resistance at a rising trend line established from the swing low in April. A reversal downward from here will challenge support in the 1.3725-1.3802 region, an area reinforced by a longer-term trend line drawn from the lows in March. Despite recent bullish momentum, prices have not made a new high and our bias remains cautiously bearish, though the current proximity to our stop-loss is certainly of concern. Still, we will stick with the risk/reward parameters put in place as we initiated the position and remain short. As before, 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: Short at 1.6274, Targeting 1.4990[/B]
[B]Weekly Profit / Loss: [/B][B]-72 pips[/B]
We sold GBPUSD at 1.6274. Prices continue to oscillate in a wide range between 1.5960 and 1.6670, with overall positioning essentially unchanged since late May. Near-term support is seen at a rising trend line stretching from the lows in March, now at 1.6301. As with EURUSD, prices are inching closer to our stop-loss but the previous swing high has not been surpassed and narrowing daily ranges point to little conviction behind bullish momentum. We will continue to hold short, looking for a break below trend line support to target 1.4990. A stop-loss will be activated on a daily close above the 06/03 wick high at 1.6667.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
[B]USD/JPY[/B]
[B]Strategy: Flat[/B]
USDJPY negated the Hammer candlestick we identified last week, validating our decision to wait for confirmation before entering short. Prices have pushed back over support-turned-resistance at 94.40 to meet a near-term falling trend line that has guided the most recent down swing (94.93). A break higher opens the door for a rally to test the top of the downward-sloping channel that has confined the pair since April, now at 96.86.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
[B]USD/CAD[/B]
[B]Strategy: Flat[/B]
USDCAD broke lower beyond support at a falling trend line from the March swing high that we indentified last week. Turning to the weekly chart, we see the pair now stands squarely above resistance-turned-support at 1.0782, a level whose significance dates back to more than a year ago a plausible area for a double bottom. Support is reinforced by a rising trend line established from the swing low in October 2008. That said, a reversal is far from confirmed we will remain on the sidelines for the time being as the pair offers a clearer entry signal.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
[B]AUD/USD[/B]
[B]Strategy: Short at 0.7896, Targeting 0.6949[/B]
[B]Weekly Profit / Loss: [/B][B]-182 pips[/B]
We sold AUDUSD at 0.7896. Prices have broken above the top of a falling channel that we noted last week as the pair continues to test support-turned-resistance at a rising trend line established from the swing low in March. The bottom line here is largely the same as that for EURUSD and GBPUSD: despite recent setbacks, the pair remains within our risk/reward parameters and we will remain short. As before, a stop-loss will be activated on a daily close above the 06/03 wick high at 0.8269.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
[B]NZD/USD[/B]
[B]Strategy: Short at 0.6305, Targeting 0.5522[/B]
[B]Weekly Profit / Loss: [/B][B]-132 pips[/B]
We sold NZDUSD at 0.6305. Last week, the pair came dangerously close to taking out our stop-loss but fell short and is now treading water below June’s swing high. Negative divergence on the RSI oscillator hints at ebbing bullish momentum. A growing divergence with risk trends may help the pair as the Dollar finds support from the Treasury’s record-setting bond auction. We will remain short, with a stop-loss activated on a daily close above 0.6601.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
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