• Euro well offered after stalling ahead of 1.4175
• Dollar/Yen could be putting in double bottom
• Cable forms bearish outside day after posting fresh 2009 highs
• Dollar/Swiss supported as anticipated on dips below 1.0800
EUR/USD - Although the head & shoulders top is taking its time to play out, the overall structure still looks quite toppish and we anticipate a fresh drop below 1.3750 over the coming days to expose the measured move objective by 1.3250 further down. The latest price action helps to confirm, with rallies stalling out ahead of 1.4175 on Tuesday, before reversing sharply back towards Monday's lows. A break below 1.3980 should accelerate declines. Only back above 1.4015 gives reason for pause. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/JPY - For now, it looks like the market is content on trading within a broad range, loosely defined between 94.00-100.00. The latest setbacks have been very well supported on dips below 95.00 and Tuesday's rally could now be setting up the potential for a double bottom with a break back above the neckline at 96.60 to open a move back towards the upper range, with the 98.00 figure seen as a measured move objective. Inability to clear 96.60 will however keep the pressure on the downside and shift the focus on the key 93.55-85 trend lows from March and May. Strategy: STAND ASIDE; AWAIT CLEARER SIGNAL.
GBP/USD - Despite the surge to fresh 2009 highs by 1.6745 on Tuesday we retain our bearish bias. The market has failed to hold onto fresh gains and has reversed quite sharply to take out the previous daily low. This now sets up a bearish outside day and exposes a more significant drop over the coming sessions back towards 1.6185. In the interim, look for any rallies to be well capped ahead of 1.6600. Strategy: SIDELINED FOR NOW; LOOK TO SELL.
USD/CHF - As expected, dips below 1.0800 have been very well supported on Tuesday with the market reversing course and rallying back towards 1.0900 thus far. The market is in the process of carving a meaningful base and we look for a fresh higher low by 1.0780 ahead of the next upside extension back above 1.1025 and towards our 1.1500 medium-term objective. Ultimately, only a close back below 1.0750 would negate. Strategy: SIDELINED FOR NOW; LOOK TO BUY.
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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