• Euro takes out 1.4200 to expose yearly highs
• Dollar/Yen higher but expected to be well capped into 95.00's
• Cable breaks back into 1.6500's; solid internal range resistance
• Dollar/Swiss still locked in choppy multi-day consolidation
• Dollar/Cad long stopped; will look to re-buy below 1.1000
EUR/USD - The break on Monday above 1.4200 is discouraging for bears with the 2009 highs by 1.4340 now directly exposed. However trade remains quite choppy and we still would not rule out the potential for a topside failure ahead of 1.4340 in favor of a bearish resumption. In the interim, we recommend staying on the sidelines until a clearer opportunity presents. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL
USD/JPY - Remains locked in a downtrend off of the yearly highs by 101.45 and a lower top is now sought out below 97.00 ahead of the next drop. Look for the 200-Day SMA by 95.40 to cap any additional gains in favor of a retreat back below 91.75 and towards the critical 87.15 matched trend lows. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD - The rally on Monday has broken back into the 1.6500's and now exposes a potential retest of the yearly highs by 1.6745. However, we still would not rule out the potential for a failure ahead of 1.6745 as we still hang on to the possibility for the formation of the right shoulder of a very loose and messy head & shoulders top. In the interim, we will remain sidelined. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
USD/CHF - In the process of attempting to carve out a meaningful medium to longer-term base by 1.0590. However a period of choppy consolidation still needs to be convincingly broken to the topside to confirm basing prospects and open a recovery extension back towards the 1.1500 area. The key level to watch above comes in by the recent highs at 1.1025 and break of this level will help to confirm our bullish outlook. A break back under 1.0590 will however delay. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
USD/CAD - We were stopped out of our long from 1.1205 @1.1055 this morning but have still not lost hope in the USD and will once again look for a shot to establish another long lower down. The 78.6% fib retracement off of the major 1.0785-1.1725 move comes in by 1.0985 and with daily studies now approaching oversold levels, we are compelled to look to buy on a dip below 1.1000 today in anticipation of the formation of a medium-term higher low above 1.0785. STRATEGY: BUY @1.0990 FOR AN OPEN OBJECTIVE, STOP @1.0760. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5PM ET) ON MONDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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