• Euro seen retesting 1.3740 into Wednesday
• Dollar/Yen consolidates latest gains
• Cable ascends to fresh 2009 highs above 1.5500 and just shy of 200-Day SMA
• Dollar/Swiss heading back towards 1.0975 trend lows
EUR/USD - Setbacks on Monday towards the 200-Day SMA have been very well supported with the market bouncing from daily lows by 1.3420 back to 1.3660 thus far. Overall in the short-term, we continue to see dips limited, with the risk for a fresh push higher to challenge and break above the key trend highs at 1.3740. Once 1.3740 is broken, we will then look to establish USD long positions in anticipation of a more medium-term USD rally. Strategy: SIDELINED; AWAIT CLEARER SIGNAL (Sell recommendation issued earlier not expected to be triggered).
USD/JPY - The bottom of the Ichimoku cloud has proved to be a formidable support for now and the pair has reversed course to trade to 96.70 thus far. Look for an interim low by 94.55 and fresh upside over the coming days back towards 97.85. Only back under 94.55 negates and exposes deeper setbacks. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
GBP/USD - Has finally broken the up-down pattern of the past several days to accelerate to fresh 2009 highs above 1.5375. Gains have stalled for now just ahead of the critical longer-term 200-Day SMA at 1.5570, but we look for this level to be tested over the coming hours. The last time the pair closed above the 200-Day SMA was back on July 23, 2008. The daily RSI is however approaching overbought and we would be looking for an opportunity to sell into any rallies above the 200-Day. Strategy: SIDELINED; AWAIT CLEARER SIGNAL. (Sell recommendation issued earlier not expected to be triggered).
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com. If you wish to receive Joel's reports in a more timely fashion, e-mail email@example.com and you will be added to the distribution list.
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