daily technicals

The Euro has finally shown renewed signs of life against the US Dollar, and a noteworthy correction is consistent with our earlier calls for a short-term retracement. We wrote this morning, “Weekly RSI on the EUR/USD is now at its most bearish extreme since the inception of the Euro, and support at 2006 lows is the only worthwhile price floor above 1.2145. Given such extreme readings on weekly oscillators and a recent flip in EUR/USD sentiment, a short-term recovery seems the more likely outcome for the Euro/US Dollar pair.” Shorter-term, the EUR/USD will encounter resistance at the 61.8 percent retracement of the 1.3010-1.2330 move at 1.2150, and a break above would leave the pair open for a retest of the psychologically significant 1.3000 mark.  

 

The Japanese Yen saw a sharp retracement of recent advances, but the USD/JPY has now stalled at potentially important support at the 98.40 mark. The level represents spike-lows and highs as well as the 38.2 percent Fibonacci retracement of the 110.70-90.90 move. A break above said level seems likely if we see a continuation of US price action through later Asian trading, with subsequent resistance to come in at the psychologically significant 100.00 mark. Any further rallies would have to contend with the 50.0 percent Fibonacci retracement of the aforementioned move at 100.77. Discuss the USD/JPY in our forex forum.

 

In our morning technical report we highlighted the fact that the British Pound had bounced at the 78.6 percent Fibonacci retracement of the 1.3700-2.1100 advance, and said “the pair’s sharp short-term recovery suggests further gains are in store.” The GBP/USD went on to break through the rising hourly trend channel at 1.5756, and it now trades at key resistance of previous spike-highs and the 61.8 percent Fibonacci retracement of the 1.6330-1.5270 move. A continued stall at said level leaves risks to the downside, but our forex trading signals forecast further GBP/USD strength. Subsequent important resistance is eyed at the 1.6000 mark, with the full retracement of the recent bear wave at 1.6330 would be a reasonable price target on a sustained break higher.  

 

This morning we wrote that the US Dollar/Swiss Franc pair looked as though it had reached the top of its multi-year trend channel, and continued weakness suggests that the USD/CHF may indeed have set a medium-term top. A look at the USD/CHF’s shorter-term chart shows that it currently trades at the bottom of its upward-sloping price formation, and a break below would provide an attractive signal to go short the pair. A break below 1.1487 would signal that a move towards previous lows near 1.1300 is likely.

 

The Canadian Dollar has finally made a noteworthy retracement against the US Dollar, with a hold of the top of the USD/CAD’s upward-sloping trading channel bringing short-term losses. In doing so, the USD/CAD has run into support at the 50.0 percent retracement of the 1.2430-1.3020 move at 1.2720. A continuation of US Dollar weakness would likely lead the pair through said level and onto subsequent trendline support closer to 1.2650.

 

The Australian dollar has seen a noteworthy retracement of previous declines against the US Dollar, and in doing so the AUD/USD now trades at key resistance levels. The pair stands at risk of short-term losses if it is unable to clear the 61.8 percent Fibonacci retracement of the 0.6750-0.5990 move, but a continuation of broader US Dollar weakness seems relatively likely to push the AUD/USD through said support. Subsequent resistance would come in at congestion levels near 0.6500, while the 78.6 percent Fibonacci retracement of the aforementioned move provides a potential stumbling block at 0.6580.

 

The New Zealand dollar finds itself in an unsurprisingly similar situation to that of the Australian dollar, with broader US dollar weakness and a recovery in risky assets leading to sharp AUD and NZD retracements. The pair currently trades near potentially significant Fibonacci resistance at the 61.8 percent retracement of the 0.6000-0.5360 move at 0.6750. A further recovery in the pair would need to convincingly break said level before negating our overall NZD/USD-bearish stance.