• Euro stubbornly bid
• Dollar/Yen reverses
• Cable finding support
• Dollar/Swiss closer to 78.6
EUR/USD – A very frustrating market for bears, with overbought signals being ignored and any sign of a short-term reversal being quickly and easily negated. Monday’s setbacks were well supported by the 10-Day SMA, and the market has since broken back above Monday’s high to potentially open a retest of the recent 2009 highs by 1.4770. While we do not have any open positions in the major, we do continue to recommend looking for opportunities to sell the market with a major corrective pullback still seen in the cards. For today, a rally to fresh 2009 highs is entirely possible, but any gains beyond 1.4770 are seen limited to the 1.4800 figure and traders should look to sell on rallies into 1.4800. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/JPY – Back under pressure on Tuesday with the gains from the break of a double bottom by 91.65 neckline resistance stalling well shy of the 93.30 objective in favor of a resumption of the broader downtrend. It is too early to tell at this point, but a lower top could now be in place by 92.55 ahead of the next drop below 90.00 and towards critical support by 87.15. STRATEGY: STAND ASIDE FOR NOW; SELL RALLIES
GBP/USD – We continue to maintain a sell on rallies approach to this market with the view that the pair has made a meaningful high above 1.7000 this year. The market looks to be in the process of carving the right shoulder of a head & shoulders top that ultimately would project setbacks to 1.5000 over the coming weeks. We are now nearing and expected to test key neckline support which comes in just under psychological barriers at 1.6000. Any intraday rallies above 1.6400 on Tuesday should be sold into. STRATEGY: STAND ASIDE FOR NOW; LOOK TO SELL RALLIES
USD/CHF – The recent break below 1.0275 now opens the door for a deeper drop into the lower 1.0200’s over the coming hours. However, daily studies are now oversold and we would recommend looking to take advantage of any dips towards the 1.0200 figure to establish a very playable long trade. The 1.0200 figure coincides with the 78.6% fib retracement off of the major 2008 low-highs and should serve as a formidable level to prop any additional declines. STRATEGY: STAND ASIDE FOR NOW; LOOK TO BUY DIPS
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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