• Euro setbacks continue to be very well supported
• Dollar/Yen locked in choppy consolidation trade
• Cable easily exceeds key psychological barriers; ignores overbought readings
• Dollar/Swiss rallies one again well capped ahead of 1.0930
EUR/USD - With the daily RSI rolling over from overbought, the risks from here are for a material pullback over the coming days. However, Tuesday and Wednesday's jackknife reversals off of the respective daily lows is concerning and we will need to see a break back below 1.3860 to get things once again moving back to the downside. Above 1.4050-60 delays and exposes the 1.4100-50 area. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
USD/JPY - The market had been well offered over the past several weeks but setbacks have now stalled out just shy of next key support by 93.55 from March, which guards against the critical 87.15 multi-year trend lows. Friday's bullish close has been followed by some constructive consolidation this week which could now suggest that an interim base is in place by 93.85 ahead of a bounce back towards 96.70 over the coming days. Below 93.85 negates. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
GBP/USD - Any pullbacks intraday have been met with some very strong buying and the market continues to ignore daily overbought readings in favor of a retest on critical psychological barriers by 1.6100. Tuesday's price action initially looked quite bearish after breaking down to take out the previous daily low and end a sequence of 5 consecutive daily higher lows. However, the sharp rebound into the afternoon quickly dashed any hopes for a more significant retreat in favor of a push to fresh 2009 highs easily exceeding 1.6000. While we do anticipate a major pullback over the coming days, recent price action suggests that the time has not yet come for said correction. Strategy: SELL @1.6120 FOR A 1.5520 OBJECTIVE, STOP @1.6270.
USD/CHF - Any hopes for a recovery on Tuesday were delayed with the sharp pullback into the afternoon back to daily opening levels. The market has since been chopping around, considering its next move. A break below 1.0800 will open the door for bearish resumption exposing the 2009 lows at 1.0610, while back above 1.0930 would suggest that an interim base is in place, favoring a more significant corrective rally. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
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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