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• Euro well supported on dips; eyes 2009 highs
• Dollar/Yen well supported ahead of 93.55
• Cable eyes test of psychological barriers at 1.6000
• Dollar/Swiss approaching 78.6% fib retrace of major move

DC5-25-09

EUR/USD

EUR/USD - With the daily RSI above 70.0 and overbought, the risks from here are for a material pullback over the coming days. However, the 2009 highs are just above at 1.4060 and we would expect to see this level to be taken out before considering the start to a major pullback. The market is currently trading in an inside day on the lightened Monday trade. The key level to watch below comes in by 1.3890 with a break to accelerate declines and confirm short-term topping. Strategy: SIDELINED; AWAIT CLEARER SIGNAL

Level

Resistance

Details

1.4150

R3

12/31 high

1.4060

R2

1/2 09 high

1.4050

R1

5/22 high

Level

Support

Details

1.3925

S1

5/21 high

1.3890

S2

5/22 low

1.3725

S3

10-Day SMA

USD/JPY

USD/JPY - The market has been well offered over the past several days but setbacks have now stalled out just shy of next key support by 93.55 from March, which guards against the critical 87.15 multi-year trend lows. Friday's bullish close has been followed by some upside on Monday to break a sequence of consecutive daily lower highs and lower lows. This could now suggest that an interim base is in place by 93.85 ahead of a bounce back towards 96.70 over the coming days. Below 93.85 negates. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

Level

Resistance

Details

96.70

R3

5/19 high

96.25

R2

5/20 high

95.40

R1

10/100 SMAs

Level

Support

Details

94.40

S1

5/25 low

93.85

S2

5/22 low

93.55

S3

3/19 low

GBP/USD

GBP/USD - Daily studies are highly overbought and we are looking to establish a short trade in anticipation of a major corrective pullback over the coming days. The pair has extended to fresh 2009 highs by 1.5950 on Friday ahead of the latest minor setbacks, but we still see scope for a push above major psychological barriers at 1.6000 before initiating a counter-trend short trade. Key support now comes in by 1.5755 with a break required to confirm short-term topping. Strategy: SIDELINED; AWAIT CLEARER SIGNAL. We recommended a sell @1.6020 but do not expect this to trigger by 5pm NY close.

Level

Resistance

Details

1.6110

R3

11/4 high

1.6030

R2

11/6 high

1.5950

R1

5/22 09 high

Level

Support

Details

1.5835

S1

5/25 low

1.5755

S2

5/22 low

1.5700

S3

Figure

USD/CHF

USD/CHF - Continues to trade with a heavy tone into the new week with the market on the verge of putting in the 5th consecutive daily lower high. Daily studies show room for a little more weakness but ultimately, the risks from here are for a major upside reversal over the next few days. A break below 1.0810 exposes next key support by 1.0715 which represents the 78.6% fib retracement off of the 1.0370-1.1370 move. Back above 1.0940 would be required to open bullish reversal. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.

Level

Resistance

Details

1.1165

R3

5/19 high

1.1130

R2

5/20 high

1.1055

R1

5/21 high

Level

Support

Details

1.0810

S1

5/22 low

1.0715

S2

78.6% fib

1.0610

S3

1/2 09 low

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com. If you wish to receive Joel's reports in a more timely fashion, e-mail jskruger@fxcm.com and you will be added to the distribution list.

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