Euro can’t manage a close above the 20-Day SMA; bearish. Dollar/Yen pullback risk increasing. Cable reverses sharply; eyes 1.4055-95. Dollar/Swiss locked mid-range. Dollar/Cad reversal day puts us back on breakout watch. Australian Dollar recovery prospects fading. New Zealand Dollar contemplating fresh trend lows.
EUR/USD
| EUR/USD – The market continues to consolidate above the recent range lows by 1.2515 with a higher platform now forming by 1.2660. Price action has been quite choppy and no clear short-term directional bias can be established at current levels. It is however worth noting that the pair has been unable to close above the 20-Day SMA since January 2, and multiple attempts to do so over the past few days have failed. Key level to watch above and below remain 1.2995 and 1.2660. Strategy: SIDELINED; AWAIT CLEARER SIGNAL. |
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USD/JPY
| USD/JPY – The break of the double bottom neckline by 94.60 now projects eventual gains back above 100.00 and towards the 104.00 area. However, we continue to warn against the shorter-term likelihood for a pullback, as more often than not, once these necklines are triggered, the price usually reverses course before resuming the direction of the pattern breakout. The daily RSI is also now above the 70 level for the first time since June 2007, warning of a potential reversal. Look for a break back below 96.35 to confirm. Above 96.35 keeps the upside momentum intact and exposes next resistance by 98.85, the 50% retrace off of the 110.70-87.15 move. Strategy: SIDELINED; AWAIT CLEARER SIGNAL. (We had issues a sell this morning at 98.20 but do not expect this to trigger. The recommendation expires on the NY close). |
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GBP/USD
| GBP/USD –The pair is rolling back over after the latest rally attempts stalled out by the 61.8% fib off of the 1.4990-1.4095 move, and failed to close back above the key 50-Day SMA. Look for setbacks to continue into Thursday with an acceleration expected on a break back below 1.4095 (18Feb low) to expose the critical trend lows by 1.3500. Only back above 1.4665 will negate. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
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USD/CHF
| USD/CHF – Remains locked in a violent multi-day sideways chop with price action largely confined to the 1.1465-1.1890 area. Last Friday’s extremely bearish reversal day has shown no follow through, with the market bouncing back into the mid-range. The overall structure however remains bullish and we expect dips to continue to be well supported ahead of an eventual break to challenge the key 2008 highs at 1.2300. Strategy: SIDELINED; AWAIT CLEARER SIGNAL.
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