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Overall, the forex market moved into a risk tolerant mode during the overnight session, helping the major currencies post strong gains against the dollar. As such, the dollar index lost 43 basis points overnight, something that pushed the index below the 79.00 support area. Additionally, the dollar declined against all of the major pairs except for the yen, which is one of the 25 most traded currencies in the world. The largest part of the uptrend seen in the currency market was influenced by the S&P futures and by crude oil, even though the correlations between these assets have been relatively disjointed over the last few days.
The Euro (Eur/Usd) broke above the 1.4170 area during the overnight session, the last major resistance area that held the pair from testing the high of the current year. Technically speaking, the euro has an open road to test the 1.4335 area, where it topped at the beginning of June, but the S&P futures must remain in positive territory for this to happen.
The Pound (Gbp/Usd) headed higher most of the time during the Asian and European sessions, something that helped the pair gain 190 pips and break above a resistance trend-line that has held the pair since the beginning of June. The next important resistance area ahead will be the 1.6600 area, an intra-day area that the pair has only broken above once in almost eight weeks.
The Aussie (Aud/Usd) extended the uptrend started in the previous week throughout the overnight session, as the S&P futures moved lower and the dollar index declined across the board. For now, the aussie is trading just below the trend-line that connects the 2009 06.03 and the 06.11 highs. If it breaks any higher, the aussie could test the 0.8250 resistance area relatively quickly.
The Cad (Usd/Cad) is currently trading just below TheLFB S3 (1.1035), reaching the lowest value in a month as the pair declined 130 pips overnight. This comes, after the cad traded almost flat in the previous two days of trading, on Thursday and Friday. At 8:30am EDT, there are two Canadian releases scheduled, but most likely will fail to influence the forex market in any way.
The Swissy (Usd/Chf) behaved similarly to the euro during the overnight session, as it does most of the time. The pair fell down to TheLFB S1 (1.0720) during the Asian session, and continued to move lower after the London open. For now, the swissy is trading just below TheLFB S2 (1.0685), and is near a support trend-line that connects the 2009.06.02 and the 2009.06.24 lows.
The Yen (Usd/Yen) gained 60 pips during the overnight session, closing in on the 20-day moving average. However, the pair failed to break above this price point during the London open, on relatively strong volume. The yen’s outlook lies to the upside, as long as investors continue to remain in a risk tolerant mode.
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