As the week comes to a start, we see the greenback attempting to gain bullish momentum in the markets versus the major currencies. With a lack of fundamentals today in our economic calendar, trading may be quite technical. The USDIX recorded a high so far of 76.62 and a low of 76.44.
The Euro versus Dollar pair failed to maintain levels well above the 1.47 mark last week as it ended Friday’s trading just at the level showing that the pair may engage in a slight downside correction. On the daily charts, we see momentum indicators adjusting to the downside as they exit an overbought area with the formation of a bearish candlestick (hanging man) that supports our overview for a decline towards 1.4640 and perhaps 1.4580 before rebounding back to the upside. On the four hour charts, we see indicators pointing to the downside as the Aroon up line has penetrated the 50 mark to the downside whereas the Aroon down is adjusting to the upside.
The cable’s weekly closing was bearish (bearish engulfing pattern) suggesting the pair is still forming the right shoulder of the larger head and shoulder’s top pattern with a current neckline near the 1.6070 – 1.6080 zones. The pair is currently facing the 23.6% correction at 1.6210 for the last rally from 1.3650 which was topped at 1.7041. A breach of this level will open the way for the pair to head towards the neckline yet we may witness a slight upside correction to 1.6410 to relieve momentum indicators before reversing back to the downside with enough bearish momentum to reach the technical targets for the pattern near the 1.5050 mark.
Finally, the USD/JPY pair is currently trading at 91.50 within a really tight range as it attempts to head towards the 23.6% correction at 91.90 – 92.00 for the last decline from 97.75 to 90.10. The Stochastic indicator neared an overbought area on the daily charts yet hasn’t provided us with any bearish signs which may support our overview that the pair is to reach the above mentioned correction before reversing back to the downside with enough strength to breach 90.10 and target 89.50 and 88.30 respectively.