US Dollar strength looks to be gaining momentum of major forex currencies as the greenback again becomes attractive as a safety play amid reversing stock and commodity markets. Our short Euro, the British Pound and the Australian Dollar exposure yielded 250 pips from last week and we are eyeing opportunities to sell the Canadian and New Zealand dollars against the greenback.
Strategy: Short at 1.3936, Targeting 1.2922
Weekly Profit / Loss: +89 pips
We sold EURUSD at 1.3936. Current positioning is little changed from what we identified last week: prices are showing a Head-and-Shoulders top with a neckline in the 1.3725-1.3804 region, with the near-term downswing guided by a channel established from the June high. We will remain short, looking for prices to take out the neckline as EURUSD heads to the previous swing low below 1.30. As before, a stop-loss will be activated on a daily close above the 06/03/09 wick high at 1.4340.
For more resources on the EURUSD, please visit the DailyFX Euro Currency Room.
GBP/USD
Strategy: Short at 1.6274, Targeting 1.4990
Weekly Profit / Loss: +55 pips
The bottom line for GBPUSD has been little changed since we sold the pair at 1.6274 as prices put in a clear Three Inside Down bearish reversal pattern. We will continue to hold our short position, initially targeting 1.4990. A stop-loss will be activated on a daily close above the 06/03 wick high at 1.6667.
For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room.
USD/JPY
Strategy: Flat
Last week we opted to remain flat USDJPY with the pair positioned at the top of a falling channel, looking for an attractive selling opportunity. Turning to the weekly chart, we now see the makings of a Head-and-Shoulders top forming below resistance in the 99.12-100.60 price congestion region. The top of the left shoulder is marked by the top of a falling channel, bolstering the hurdle ahead of USDJPY bulls and strengthening the case for a bearish scenario. A break of the neckline near 93.52 would serve as confirmation, opening a selling opportunity to capture a decline to the low at 87.10.
For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room.
USD/CAD
Strategy: Pending Long
Last week, we noted that USDCAD broke above resistance at the top of a falling channel and was stalling ahead of support-turned-resistance at 1.1453. This hurdle has now been overcome, exposing the last barrier to a full-blown bullish breakout at a falling trend line established from the swing top in early March. We will closely monitor prices in the days ahead, looking to enter long on a conclusive close above this juncture to target a return to 1.30.
