The majors have positioned to signal gains for the Australian and New Zealand dollars, as well as the US dollar’s pairing against the Japanese Yen. USDJPY price action has tracked closely to the Dow stock index, while the AUD and the NZD bore the brunt of carry trade liquidation fueled by recent bouts of risk aversion. Interestingly, the same cannot be said of Franc, with the USDCHF trading sideways in a range. The Euro remains a momentum trade, seeming to need to hit 1.60 regardless of developing weakness in the Euro Zone. The Pound is left looking for direction following the announcement of a last-minute liquidity injection from the BOE, while the Canadian Dollar retains its independence and continues to move along established technical trends.
Fibonacci Forum
EUR/USD
Strategy: Bullish above 1.5800, Targeting 1.6000
Last week’s bullish bias proved warranted – EURUSD broke through the triple top resistance level at 1.5900. A lull in US data late last week allowed for a brief respite in the rally as dollar bulls pushed price action back to trend line support. A close below did not materialize, with EURUSD right back above 1.5900 today as upward momentum resumes. This week is light on data from the US and the Euro Zone, so technical levels should prove to be the guiding principle behind price action. We continue to aim for a test of 1.60 before Euro traders stop to re-examine their bias once again.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
GBP/USD
Strategy: Flat, waiting for confirmation
Last wee, we saw GBPUSD trading orderly lower along a downward-sloping resistance trend line. Mid-week, a sharp rally catalyzed the pair to break this level. The rally was contained at the 2.00 level, a level of significant psychological resistance made stronger by a 50% Fibonacci retracement of the 3/14-4/15 decline. Pound bears took price action back to the trend line, where resistance has now turned into support. Without a clear signal to guide our thinking, we will remain neutral on GBPUSD until further evidence emerges.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
USD/JPY
Strategy: Bullish against 102.90, Targeting 105.19
USDJPY finally validated our multi-week bullish bias, rallying past resistance at 102.90, the 38.2% Fibonacci retracement of the 12/27/07-03/17 decline. Following the initial break, the pair has now retraced back to this Fib level as price action consolidates. As we noted last week, we continue to see USDJPY test the 50% Fibonacci retracement at 105.19.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
USD/CHF
Strategy: Flat, waiting for entry point
Last week we saw USDCHF tread along the low of its current range between the 38.2% and 23.6% Fibonacci retracements of the 02/13-03/17 down move. The pair looked to be building momentum to break lower, causing us to favor a bearish bias. Similarly with the EURUSD, the lull in the US calendar late last week brought a dollar relief rally, taking USDCHF up for another test of range resistance. Price action has since eased back to the middle of the range. With the pair trading sideways, we will wait to commit to a directional bias. A move to the bottom of the range at 0.9986 would offer an opportunity to play oscillation within the range with a long position. On balance, such a trade would counter the established bearish trend, so traders would be wise to carefully assess their analysis of risk-reward parameters.
For more resources on the USDCHF, please visit the DailyFX Swiss Franc Currency Room.
USD/CAD
Strategy: Bullish against 1.0039, Targeting 1.0250
As we expected, last week saw USDCAD decline from the established long-term range top at 1.0250. Price action has since stalled at the intersection of an upward sloping trend line and the 50% Fibonacci retracement of the 01/22-02/28 down swing. Having already tested the next Fib level at 1.0117 (61.8% Fibonacci retracement) after the initial break lower, the pair looks poised to pick up steam for a more substantial upward push. Our bias on USDCAD has changed to bullish, eyeing a return to 1.0250.
For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room.
AUD/USD
Strategy: Bullish against 0.9400, Targeting 0.9500
Last week’s analysis was validated as AUDUSD turn upward following a descent to the 50% Fibonacci retracement at 0.9220. The pair stalled just below 0.9400, showing the makings of a triple top. Price action dropped lower sharply, but downside momentum was contained by the 61.8% Fibonacci retracement at 0.9287. This week opened with AUDUSD breaking past 0.9400. We remain with our initial bias established at the long-term upward sloping trend line test on 04/01, looking for AUDUSD to reach 0.9500.
For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room.
NZD/USD
Strategy: Bullish against 0.7900, Targeting 0.8100
NZDUSD has spent last week consolidating above trend line support above 0.7900, a level that also coincides with the 38.2% Fibonacci retracement of the 01/22-02/27 rally. Price action looks determined to inch higher, albeit slowly. Without a significant change in positioning since last week, we continue to hold to a bullish strategy, targeting a rise to 0.8100.
For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room.
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