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Overall, the major currencies advanced for a second day against the dollar, but the gains were relatively small. Moreover, some pairs like the euro and swissy held at the highs against the dollar, without being able to break during the European session, which is not usually interpreted as a positive sign. Moreover, the currency market might continue to develop a range bound channel if S&P futures fail to break above the 894.00 resistance area. Ahead, the currency market might have a very active U.S. session, as investors prepare for the FOMC meeting.  

The Euro (Eur/Usd) showed a lot of uncertainty during the overnight trading session, despite the strong gains seen in the previous day of trading. The pair had a relatively flat Asian session, while it wasted most of the European session swinging around the 1.4100 area, where it had topped on Tuesday. On the daily chart, the euro is trading above all the important moving averages.

The Pound (Gbp/Usd) surged 150 pips during the European trading hours, being the session’s best performing pair. Moreover, the pair broke above TheLFB R1 (1.6545) with ease, something that does not happen too often. Over the last few trading days the pound has traded in a very large side-ways channel, which usually denotes market indecision, justified ahead of CBI and Inflation reads from the U.K. on Wednesday.

The Aussie (Aud/Usd) just broke above the 20-day moving average and at the same time the 0.8000 area, after the pair had a very strong overnight session. Since the beginning of Wednesday’s session, the aussie has gained approximately 80 pips, and together with the pound are the only two pairs that did not hesitate as S&P futures bounced off the 894.00 area. 

The Cad (Usd/Cad) spent most of the Asian session testing the 1.1470 area, where the pair bottomed in the previous session of trade. During the London open, the cad managed to break the support area and decline another 40 pips. The cad’s outlook lies to the downside, as long as crude oil can continue retracing the declines seen over the last few days of trading.  

The Swissy (Usd/Chf) is currently struggling to break below the 1.0650 area, the last major support that holds the pair from testing the low made at the beginning of June. Over the last few trading sessions, the swissy showed a lot of strength, something that suggests it might pull a break-out attempt during the upcoming session. 

The Yen (Usd/Yen) rose as much as 60 pips during the Asian session, and tested the resistance trend-line that connects the 01.21 and the 05.22 lows. The yen failed to break to the upside due to the low volume, which forced a retracement of almost half of the move. The yen will need strong momentum to break above this resistance area.

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