• Euro breaks to fresh 2009 highs; exposes 1.5000
• Dollar/Yen confined to inside day price action
• Cable contemplates test of psychological barriers
• Dollar/Swiss finally takes out key 2009 range base
EUR/USD - The break to fresh 2009 highs on Monday beyond 1.4340 now ends the latest bout of consolidation and suggests that a medium-term higher low is in place by 1.3750 ahead of the next major upside extension towards 1.5000. However, with daily studies inching closer to overbought territory, we are more inclined to take to the sidelines until a clearer signal presents. Setbacks should be well supported ahead of 1.4200. STRATEGY: STAND ASIDE; AWAIT CLEARER SIGNAL
USD/JPY - Continues to recover out from the recent trend lows by 91.75 from early July. However, the broader structure still remains quite bearish with the market potentially looking to put in a lower top below 97.00 ahead of the next drop below 91.75. Inside day price action on Monday leaves us sidelined for now but we maintain a sell on rallies outlook while the price remains below 97.00. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD - We were stopped out of our Euro short trade from Friday (sold 1.4235; stop1.4365), but have opted to establish a fresh short trade in this pair ahead of critical psychological barriers at 1.7000. The overbought intraday studies are the primary catalyst here, with the daily ATR also well exceeded. We will hold the position into to the close and look to reassess. There is definitely the need for a material corrective pullback towards 1.6800 at a minimum over the coming hours. POSITION: SHORT @1.6901 FOR AN OPEN OBJECTIVE; STOP 1.7110.
USD/CHF - The break below 1.0590 should be extremely concerning for bulls with the market negating any hopes for a material base in favor of some bearish continuation potentially back towards the key lows by 1.0370 from late 2008. A close below 1.0590 will reaffirm bearish shift, while back above 1.0730 is required at a minimum to take immediate pressure off of the downside. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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