• Euro looking to carve lower top by 1.4075 ahead of next drop
• Dollar/Yen puts in short-term base but rallies seen well capped by 95.00
• Cable rallies find ceiling on approach to 20-Day SMA
• Dollar/Swiss continues to chop in uneventful price action
• Dollar/Cad collapses below 50-Day SMA but should soon find support
• Australian Dollar upside fails to impress; deeper setbacks ahead
• New Zealand Dollar needs to take out key support by 0.6155 to shift structure
• Sterling/Yen mounts rally after well supported by 100-Day SMA
• Euro/Cad long taken with hourly studies dramatically oversold
EUR/USD - No change into Tuesday as the market remains locked in a multi-day consolidation since positing fresh 2009 highs by 1.4340 back in early June. While our shorter term outlook has favored the bearish side (we are short from 1.4180), the medium-term outlook is more uncertain from here and it remains to be seen whether we are looking to put in a medium-term lower top by 1.4340, or a medium-term higher low by 1.3750. A break back below 1.3750 would signal a resumption of the broader bearish structure and expose a fresh drop to the 1.3000 area, while a sustained break above 1.4340 would bring 1.4720-1.4870 back into focus. Key short-term levels to watch come in by 1.4075 and 1.3830. POSITION: SHORT @1.4180 FOR AN OPEN OBJECTIVE; BOOKED PROFITS ON 3/5 OF POSITION AND STOPS AT 1.4180 ON REMAINING 2/5
USD/JPY - Daily studies are looking stretched and the market is starting to respond to the oversold studies following the latest surge out from the multi-day lows set on Monday by 91.75. Look for a break back above 93.60 to accelerate gains towards the 95.00 area. However, any gains beyond 95.00 are seen limited with a lower top now sought out ahead of a fresh drop back through 91.75 and towards psychological barriers at 90.00 which guard against the critical 87.15 trend lows. Inability to break above 93.60 will keep the short-term pressure on the downside and directly expose 91.75 over the coming sessions. STRATEGY: STAND ASIDE; LOOK TO BUY
GBP/USD - Gains have stalled out by the 61.8% fib retracement off of the 1.8670-1.3500 September 2008-January 2009 move and the market looks like it could be in the process of rolling back over in favor of a potential bearish resumption. Look for a break and close below the 50-Day SMA (1.6030) and 1.5985 to reaffirm bearish bias and expose key medium-term support by 1.5800. Below 1.5800 officially confirms bearish resumption and opens more significant drop towards 1.5000 over the coming weeks. Back above 1.6380 is required to delay bearish bias. 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. Back under 1.0750 will however delay. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
USD/CAD - The market is in the process of correcting following the recent rally to fresh multi-day highs by 1.1725 on July 8. The pullback is now testing the 50-Day SMA by 1.1400 and we see any additional setbacks below 1.1400 as limited ahead of a resumption of the broader recovery out from the 2009 lows at 1.0785. Ultimately, only back under 1.1200 gives reason for pause and will negate our constructive outlook. Back above 1.1535 is expected to accelerate gains. STRATEGY: SIDELINED FOR NOW; LOOK TO BUY
AUD/USD - Despite the rally on Tuesday, we retain a bearish bias in the pair with a lower top now sought out below the previous week's 0.8040 high, ahead of the next downside extension back below 0.7700. The 20-Day SMA comes in by 0.7950 and would be an ideal spot for the next lower top. In the interim, the key short-term level to watch below comes in at 0.7810, with a break expected to accelerate declines to 0.7700. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
NZD/USD - Despite the latest failure ahead of the 0.6600, 2009 highs and subsequent pullback, the market has still managed to hold above key consolidation/trend support at 0.6155. While weekly studies show the potential formation of a medium-term top, the market will need to break below 0.6155 to officially force a shift in the outlook. In the interim, look for rallies to stall out ahead of former support by 0.6420, with only a break back above 0.6600 ultimately negating medium-term bearish prospects. STRATEGY: SIDELINED FOR NOW; LOOK TO SELL
GBP/JPY - The market has been in the process of a bearish consolidation following the latest sharp setbacks below the multi-day rising trend-line support off of the 2009 multi-year lows. However, despite the break of the bull channel, the drop is finding some solid support by the 100-Day SMA (148.15) for now, with the cross unable to close below thus far. Look for a close below the 100-Day to officially confirm shift in structure and open a more material depreciation towards 140.00, while inability to close below the 100-Day will keep the pressure on the topside. Back above 153.20 now required to accelerate gains. STRATEGY: SIDELINED FOR NOW; AWAIT CLEARER SIGNAL
EUR/CAD - With intraday studies so heavily oversold as indicated by a daily RSI reading below 20, and the daily ATR (Average True Range) already well exceeded, we have opted to establish long position in anticipation of a material corrective bounce over the coming hours. The 50-Day SMA comes in by 1.5850 and we would expect to see any additional setbacks well supported ahead of this level. Will look to reassess into NY close and advise accordingly. Position: LONG @1.5900 FOR AN OPEN OBJECTIVE; STOP 1.5740
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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