• Euro still locked in sideways trade
• Dollar/Yen still seen below 91.75
• Cable rallies should be well capped
• Dollar/Swiss buy issued @1.0520
EUR/USD – No real change from the previous day and we continue to focus on the 50-Day SMA, with the moving average acting as a formidable support on a close basis for much of the rally from April 2009. As such, any close below would be taken as a medium-term bearish signal and open the door for a shift in the broader structure. However, price action remains quite choppy and we would not rule out the potential for a bounce on Thursday back above 1.4400. But ultimately, rallies to 1.4400 should be sold today, in anticipation of a deeper setback below the 50-Day SMA which comes in by 1.4165. Only back above the recent yearly high at 1.4445 negates. STRATEGY: STAND ASIDE; LOOK TO SELL
USD/JPY – Continues to track lower with the market now eyeing a retest of the recent trend lows by 91.75 from mid-July. With the market now exceeding the 78.6% fib retracement off of the 91.75-97.80 move, we would now expect a full retracement and retest of 91.75 over the coming session. Any rallies should be well capped ahead of 94.00, with a break below 91.75 to expose the more significant multi-year matched trend lows at 87.15 further down. However, it is worth noting that the daily RSI is approaching oversold readings with any near-term test and break below 91.75 to likely force an RSI reading below 30. As such, we may look to buy on a dip over the coming sessions towards 91.75, in anticipation of a short-term corrective rally. Stay tuned…….STRATEGY: STAND ASIDE; POSSIBLY LOOKING TO BUY
GBP/USD – More consolidation into Thursday following the previous weekly drop out from 1.6600. Key levels to watch above and below come in by 1.6380 and 1.6115, but our bias favors the downside and we view any rallies on Thursday towards 1.6400 as a good sell opportunity in anticipation of bearish continuation. Below 1.6115 exposes the 100-Day SMA at 1.6045 and then 1.5985 further down. 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. With the daily ATR currently residing at 110 points, we will issue a buy recommendation today on a dip back towards 1.0500. STRATEGY: BUY @1.0520 FOR AN OPEN OBJECTIVE; STOP AT 1.0320. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY CLOSE (5PM NY TIME) ON THURSDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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