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Trading was limited in the session with the USDJPY rocketing higher by 89 basis points, making one of the top three market moving spots on the day.  The major pairs fluctuations were kept in a relatively tight range even as selling pressure earlier forced triggered stops at the 116.50 figure in the overnight.  Now, with further dollar buying during the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />New York session pushing gains to just below the 117 level, the market is eyeing bids riddled around the 117.50 figure with option defense likely to play a key role in capping gains at 118.  Comparatively, the 116.50 figure is likely to serve as key resistance with bids continuing all the way down to 116.30.  

Fundamentally speaking, lower supermarket sales contributed to some downside in the pair as the report dipped over 2 percent for the month.  Although slightly lower than the consensus figure, the decline is still seen as detrimental to potential rate hikes in the near future.  Higher rates of consumption are likely to feed into rates of growth and subsequent inflationary pressures.  Nonetheless, even as we focus on the end of the week consumer prices report, futures traders remain steadfast in their sentiment of two more rate hikes towards the end of the year.

Profit taking is likely to cap any intraday gains as we head into the Asian session.  With that said, renewed buying is likely to meet with staunch resistance at the 117 figure as the price action looks to continue an overall range bias.  As a result, the 116.37 figure (38.2 percent fib from the 7/11-7/19 bull wave) is likely to set the stage for such bidding action.  Confirming the interim downside is a divergence in the stochastic as MACD begins to converge on a cross.  Upside potential remains limited with such heavy resistance up above.

USDCHF

The major pair tops our list of three on the session, posting the largest percentage gain and basis point gain of all three pairs.  Although dollar fundamentals were absent, the pair moved as GBPCHF experienced higher volatility on a widely noted short opportunity.  A burst of Sterling demand sent the cross through topside resistance at 2.3030, kicking stops and helping the cross hit 13 month highs at 2.3120.  The demand helped along USDCHF major longs, squeezing their way to the 1.2487 session high.  Subsequently, profit taking looks inevitable heading into the Asian session with bids at the 1.2420 figure and comparative offers to sell at the 1.2500 even figure.

Notable on the morning, SNB directorate member Philipp Hidebrand stated that the once safe haven role of the franc has diminished considerably.  This notion has not been more witnessed than in the past two weeks as tensions built up in the Middle East has done little to nothing for the Swiss denomination.  Also lending to some franc downside were comments by the policy head that indicated comfort with the current level of the domestic currency.  Given the positive economic condition, the acceptance of the current valuation should spell an end to the rate tightening cycle.

Technically speaking, USDCHF is likely to succumb to selling pressure following the days move higher.  Setting up for the scenario are a drastic divergence with MACD and the subsequent histogram along with Stochastic.  The short opportunity coincides with a topside resistance at 1.2481 (38.2 percent fib from the 7/13-7/19 bull wave).  Capping losses will likely be the 1.2405 figure which poses as the 61.8 percent fib from the aforementioned move.

NZDJPY

Rounding out the top movers is the NZDJPY cross pair.  Buoyed throughout the session, the cross was subject to carry trade bidding against the Japanese yen and stop loss buying that propped the pair in the New York morning.  However, looming over the pair and its major Kiwi leg is the Reserve Bank of New Zealand decision later this week.  Although expected to keep rates at the current 7.25 percent, the market will be looking for insight into the current state of affairs.  The overriding sentiment will keep traders focused on the upcoming trade balance data.  As of last reading, the deficit has widened to almost 9 percent of GDP, staggering considering the fundamental size of the economy.  Nonetheless, the cross cooperated with most other majors as they stood on the buy side against the Japanese major.

Price action heading into the Asian session looks light with profit taking controlling a good majority of flows.  Reaching topside trendline resistance, a move back to the support floor at 72.08 is feasible.  The figure additionally coincides with the 38.2 percent fib level from the 7/11-7/19 bull wave on the 60-minute.  Subsequently, both MACD and Stochastic are in line with the three session bearish candle formation that alludes to at least some downside in the near term.  Upside gains look to be capped by the session high of 73.01