• Euro tests offers above 1.2500
• British Pound is unwilling to relinquish 1.8400
• Antipodeans once again test their luck

Previous session overview                                                                   
Majors launched an all out assault against the dollar only to see their momentum dissipate as the greenback began to reassert it dominance. As the price action begins to turn the tide against the majors, present levels give the dollar bulls ample opportunity to enter the market and take the advantage of the extreme anti-dollar sentiment that has swept the market for the past few weeks.

1-Day Currency Pair Relative Strength

EUR/USD - Euro bulls began their retreat after failing to hold ground above the psychologically important 1.2500 figure with greenback longs hot on their trail. As dollar bulls begin to take back their territory, a move below the 1.2400 figure will most likely encounter first line of euro defenses at 1.2338, established by the 20-day SMA, with a break below most likely seeing the pair slide through 1.2300 and take on 1.2249, a level marked by the 23.6 Fib of the 1.3477-1.1869 USD rally. A move toward the 1.2250 also should be a decisive for the greenback bulls as it would signal a further move to the downside due to the break below the trendline that dominated the price action since middle of July. Indicators are becoming mixed with momentum indicator and MACD both above the zero line, while Stochastic became overbought thus adding to possibility of a pullback.

Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs continued to battle the dollar over the psychologically important 110.00 figure as the price action remained on the side of the dollar longs. A retrace toward the 109.00 level will most likely find active greenback bids which will most likely push the pair back toward the 110.00 handle. A break above the 110.00, which is defended by the combination of the 38.2 Fib of the 104.19-113.68 USD rally and a 20-day SMA, which together provide the Japanese yen longs with strong defensive position. A break above the level of such magnitude will most likely see the pair dollar push higher toward the 111.06, a 50-day SMA and a gateway to the 2005 high at 113.68. Indicators support the yen longs with both momentum indicator and MACD below the zero line, while both oscillators are sloping downward toward the oversold line.

Key Levels & Technical Indicators

GBP/USD - British pound bulls reached the end of a warpath as their attempt to reestablish their dominance is coming to an end after failing to break above the psychologically important 1.8500 figure. A reversal of fortune will most likely see the pound longs retreat under the pressure exerted by the dollar bulls. As the pair tumbles through the 1.8400 figure, a sustained momentum will most likely see the pair head toward the 1.8251, a 50.0 Fib of the 1.9219-1.2784 USD rally. A further break in the pound defenses will most likely see the dollar bulls push their way toward the 1.8179, a level marked by the August 12 daily high. Indicators are signaling trending conditions with both MACD and momentum indicator above the zero line, while both Stochastic and RSI above the overbought line, and ADX is above key 25 mark, crossing of which signals an existence of a trend.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc bulls once again raised their heads and once again attacked the greenback longs after the pair bounced of the 1.2400 figure. As the price action continues to shifts gears, the next move by the dollar longs will most likely see the pair head toward the 1.2400 figure, which capped the USD/CHF for the past few trading sessions, with a break to the upside taking on the 1.2472 level, marked by the 38.2 Fib of the 1.1492-1.3081 USD rally, which is currently protecting the psychologically important 1.2500 handle. A break above the 1.2500 will most likely see the pair take on the Swissie offers around 1.2541, a 20-day SMA. Indicators began to signal oversold conditions with both momentum indicator and MACD below the zero line, while Stochastic is treading below the oversold line.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar longs remained in a limbo as the pair continued to trade in a tight trading range that dominated the price action for the past few trading sessions. As the greenback longs muster their strength and push the CAD higher, a break above 1.1900 level will most like see the US dollar bulls take on the 1.1935, a 78.6 Fob of the 1.1720-1.2733 USD rally, with a break above taking on the 20-day SMA at 1.1966. As greenback longs remain on a war path, a psychologically important 1.2000 handle remain a key target, as it currently acts as a gateway toward the 1.2106, a 61.8 Fib of the 1.1720-1.2733 USD rally. Indicators are beginning to favor greenback traders with Stochastic slipping below the oversold line, while MACD and momentum indicator below the zero line continue to support the Loonie traders.

Key Levels & Technical Indicators

AUD/USD - Australian dollar bulls once again tested the US dollar defenses around the .7700 handle, but failed to make much headway as the pair dipped back below the figure.  A reversal from these levels will most likely see the Aussie longs fall back toward .7605, a 38.2 Fib of the .7991-.7374 USD rally that is further reinforced by the 20-day SMA. A further advance by the US dollar longs will most likely see the Aussie head toward the psychologically important .7500 handle. Indicators signal a move to the downside with MACD sloping toward the zero line and momentum indicator below the zero line, while Stochastic became overbought adding to the downward bias outlook.

Key Levels & Technical Indicators

NZD/USD - New Zealand dollar longs once again followed the antipodean counterpart into the battle against the US dollar only to fail once again in retaking the .7100 figure. As Kiwi's fall out of favor, a move to the downside will most likely see the pair aim for the bids around the psychologically important .7000 handle, with a sustained break to the downside heading toward the .6986, a key 38.2 Fib of the .7468-.6681 USD rally. A further collapse of the New Zealand dollar defenses will most likely see the greenback bulls crash their way toward the .6873, a 23.6 Fib of the .7468-.6681 USD rally. Indicators remain supportive of the New Zealand dollar bulls, with both MACD and momentum indicator above the zero line, while overbought Stochastic adds to the outlook that Kiwi has reached the end of its flight.

Key Levels & Technical Indicators

Technical Levels - London/New York

Sam Shenker is a Technical Currency Analyst for FXCM.