• Euro confined to inside day price action following steep setbacks
• Dollar/Yen rallies not ready to stall out just yet
• Cable continues to chop around; maintain bearish outlook
• Dollar/Swiss inches closer to key 1.1025 consolidation highs
EUR/USD - The market has failed to extend declines on Thursday, instead favoring a bout of consolidation following Wednesday's sharp pullbacks. However, the latest topside reversal in the market brings into focus the potential for a more significant medium-term double top to be confirmed on a break below 1.3750. Look for a close below the 50-Day SMA at 1.4040 to accelerate declines towards 1.3750. Rallies should now be well capped ahead of 1.4200 with only a break back above 1.4305 to ultimately negate bearish outlook. STRATEGY: SELL @1.4150 FOR AN OPEN OBJECTIVE; STOP 1.4355. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5pm ET) ON THURSDAY.
USD/JPY - Has broken above the internal trend-line that we had written about in previous daily reports but our outlook remains unchanged with the market still very much confined to a well defined downtrend off of the 2009 highs. While daily studies keep us on the sidelines after still showing room to run, we look for a lower top to carve out in the 96.00 area and below 97.00 ahead of the next drop. Only back above 97.00 concerns. STRATEGY: STAND ASIDE; LOOK TO SELL
GBP/USD -Despite the recent rally back into the 1.6500's we do 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. Look for any additional rallies over the coming sessions to stall out ahead of 1.6700 in anticipation of a major pullback. A break below 1.6265 will help to reaffirm bearish bias, while only back above 1.6745 negates and gives reason for pause. STRATEGY: STAND ASIDE; 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 a break of this level will help to confirm our bullish outlook. The 1.1025 level is also the neckline of a potential double bottom. Only back under 1.0590 negates. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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