• Euro considers close below 50-Day SMA
• Dollar/Yen extends declines to expose 91.75
• Cable setbacks seen extending back to 1.6000
• Dollar/Swiss higher low sought ahead of 1.1025 retest


EUR/USD

EUR/USD - Remains under intense pressure since positing fresh 2009 highs by 1.4450 on August 5. Setbacks have now extended below the 50-Day SMA which had been supporting the market over the past several weeks. The last time we saw a close below the 50-Day was back on April 27, and it will be interesting to see if the market can put in a close below the moving average on Monday. A close below 1.4090 could warn of a material shift in the medium-term structure and expose a deeper drop back towards 1.3750. Inter-day rallies are now expected to be well capped ahead of 1.4300. STRATEGY: STAND ASIDE; LOOK TO SELL


USD/JPY


USD/JPY - The recent daily close above the Ichimoku cloud has proved fleeting with the market pulling back sharply since to put in consecutive days of material declines towards 94.00 thus far. It now looks as though the market would like to adhere to a bear channel off of the 2009 highs and longer-term downtrend with setbacks seen extending below 91.75 and towards critical multi-year support by 87.15 over the coming weeks. Any rallies should be well capped ahead of 96.00. STRATEGY: STAND ASIDE; LOOK TO SELL


GBP/USD

GBP/USD - The daily close on Monday should be watched closely with a close below the 50-Day SMA to potentially signal a material shift in the medium-term structure in favor of the USD. The last time the market was below the 50-Day SMA was back in March, with the massive rally of the 1.3500 multi-year lows being supported by the 50-Day throughout. However, we would recommend that bears proceed with caution, with any declines into the 1.6000 area expected to find some solid support. Nevertheless, we anticipate a close below the 50-Day SMA today to open a direct retest of 1.6000 over the coming days. Any rallies should be well capped ahead of 1.6500. Weekly studies show the potential for a major double top with a break below neckline support at 1.5985 to open a move back towards 1.5000. STRATEGY: STAND ASIDE; LOOK TO SELL


USD/CHF


USD/CHF - Continues to chop around within a very well defined multi-week range with the price currently locked in the middle of said range. No reason to be taking any positions here and will only consider playing the pair on a break towards the range lows or retest of the range highs. Recent price action has been constructive however, and a higher low is sought by 1.0670 ahead of fresh upside towards the range highs by 1.1025 over the coming days. Below 1.0670 negates.
STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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