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The EURUSD was led lower on the session following the better than expected consumer sentiment figures.  Expected to increase by only slightly in the month of October, the preliminary figure actually jumped to a 92.3 print following a previous 85.4.  Attributed to the better than expected figure, were lower prices at the pump and higher equity market valuations.  The improvements are setting up for early forecasts of a better than expected holiday spending season.  Ultimately, this bodes well for the worlds largest economy as consumer spending constitutes approximately 60 percent of overall growth. 

The days move is placing a lot of attention on next weeks schedule as a full load is expected for the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US economic calendar.  Posing as the most sought after results, both the producer and consumer price surveys will add to current speculation that the Federal Reserve will more than likely keep rates at the current 5.25 percent rather than entertaining the possibility of a rate cut.

Falling through key support, offers were taken all the way lower to the 1.2483 low during the North American session.  Now consolidating into the weekend close, bidders are likely to entertain the level as the 1.2500 handle stands as a longer term support line on the daily.  This makes the case for long initiations even stronger as both MACD and Stochastic show plenty of confirmation.  Shot on the 60-minute, Stochastic is forming a golden cross at the close with the MACD histogram showing a bullish convergence.  As a result, the open should provide for some action as bulls eye the 1.2575 figure with a break lower setting bears up for a move to 1.2400.

USDCHF

The scenario is reversed in the USDCHF currency pair as the Swissie counter continues to perform in line with Euro action.  As a result, traders will be eyeing next weeks handful of reports in gauging further direction in the currency pair.  This will include producer and import prices along with the trade balance and retail sales surveys.  Market sentiment continues to side with another 25 basis point addition to the current rate band that the Swiss National Bank is supporting.  Any detriment to the idea, declines in economic reports, will likely add to further dollar strength as officials have already cited the possibility of an unchanged benchmark rate for the rest of 2006.

Approaching a key resistance level heading into the close, the USDCHF currency pair is likely to see some downward pressure following the weeks extreme advance.  With plenty of sellers emerging at the 1.2750 and 1.2800 figures, the already visualized resistance level is being backed by a death cross in the Stochastic and an incremental bearish divergence in the MACD histogram.  The suggestions are likely to add to a bearish move lower to test the 1.2600 figure at the start of next week.  However, with a break above on bullish momentum, calls for the 1.3000 are likely to follow.

USDCAD

Nothing much was released for the Canadian economy, aside from the monthly new motor vehicle sales survey.  For the month of August, new motor vehicle sales were supportive of further expansion, rising by 2.8 percent.  Subsequently, the July report was revised higher by 3.8 percent, lending to further bias that the economy is still suggestive of near term growth.  Adding to a handful of recent reports that have supported the aforementioned notion, the report did little in terms of intraday action with most of the market sifting through US based data on the day.  Nonetheless, traders will continue to eye further economic data in the worlds ninth largest economy, making sure that growth isnt being jeopardized along with any signs that interest rates may have to be lifted in the short term.   As a result, focus will likely be placed early in the week as the Bank of Canada will release their interest rate decision.  With the consensus expecting a stay on rates at 4.25 percent, traders will be scouring subsequent rhetoric in hopes of further rate direction in the future.

Rising on the week, the USDCAD pair may be set for some downside action as the currency approaches significant resistance at the 1.1400 figure.  The level coincides with upside trendline of the channel that has contained the pair for the past 5 months.  Confirming the sentiment seems to be a near term formation of a death cross in the Stochastic as the MACD histogram signals a near term top.  As a result, the likely move will be one in favor of the bears as sellers are likely to take the pair lower toward the 1.1200 support in the daily time frame.  However, should the price break on the bullish side, taking out the previous sessions high, the next formidable barrier will be at the 1.1450 (spike high on July 24^th) before 1.1500 can be muttered.