Technical Overview

• Euro pushes toward 1.2300
• British pound climbs above 1.8100
• Swiss Franc bounces of 1.2600

Market Outlook
Dollar defenses once again were tested by the majors in the price action that can be only described as advance-retrace-advance as majors fail to realize that the dollar is here to dominate the price action. 

1-Day Currency Pair Outlook

EUR/USD - Euro bulls decided to retaliate against the greenback longs and pushed the pair above the 1.2300 figure. As greenback longs fight back and reestablish control over the pair, their next move against the euro bulls will most likely see the pair head lower and test the 1.2200 figure, thus breaking below the 1.2247, a 50-day SMA and a 23.6 Fib of the 1.3477-1.1876 USD rally that gave the euro bulls support during their counterattack. As dollar longs continue to press their advance, the next move to the downside will most likely see the greenback take on the euro defenses around 1.2126, a level marked by the August 19 daily low, with collapse of the single currency defenses seeing the pair head toward the psychologically important 1.2000 handle. Indicators are favoring euro long with both momentum indicator and MACD above the zero line. Oscillators are beginning to approach oversold territory thus raising caution for the dollar longs.

Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs once again tested dollar defense as they pushed toward the psychologically important 110.00 figure. A countermove by the dollar longs will most likely see the pair advance toward the 50-day SMA at 110.90. A break above the 111.00 will most likely see the dollar longs push their way toward 111.48, a level marked by the 23.6 Fib of the 104.18-113.74 USD rally. A sustained momentum of the dollar push will most likely see the fall of 112.62, a defensive position established by the August 8 daily spike high and a gateway to the 2005 high at 113.68. A break above the 113.68 will most likely open the psychologically important 115.00 handle as a potential target as a break above that will most likely see a long term trend heading toward the 120.00 figure. Indicators are beginning to diverge, with momentum indicator above the zero line and MACD sloping upward toward the zero line, while neutral oscillators give greenback bulls enough room to maneuver.  

Key Levels & Technical Indicators

GBP/USD - British pound bulls received another dose of pounding from the greenback longs after the pair tumbled below the 1.8100 figure. A further collapse will most likely see the sterling further lose its shine as pair heads south toward the 1.8032, a level marked by the 38.2 Fib of the 1.9214-1.7283 USD rally, which currently protects the psychologically important 1.8000 figure. A fall of the 1.8000 figure will signal a run toward the 1.7886, a defensive position established by the pound longs using the 50-day SMA. Indicators are supporting sterling longs with both MACD and momentum indicator above the zero line, while neutral oscillators give either side plenty of room to maneuver.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc longs decided to press their luck one more time and launched a counterattack against the dollar only to see the pair stall around 1.2600 figure. As the pair climbs above the 1.2700 figure and takes out the CHF defenses at 1.2705, a level marked by the 23.6 Fib of the 1.1492-1.3085 USD rally, the next move by the dollar longs will most likely see the Swiss Franc defenses around 1.2786, marked by the August 24 daily high, fall as dollar longs will most likely make thair way toward 1.3000. An advance toward the 1.3000 will most likely has to contend with 1.2922, a last line of defense established by the Swiss Franc longs, before dollar longs can take on the big level. Indicators beginning to diverge as the Swissie longs fell out of favor with momentum indicator treading above the zero line and MACD sloping to the upside below the zero line. Oscillators remain neutral with both RSI and Stochastic giving the greenback bulls enough breathing room.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to size up the US dollar longs as the price action in the pair continued to orbit the 1.1800 figure. As both sides get ready for a showdown, a move to the upside will most likely see the Loonie longs retreat toward the 1.1900 figure, with a break to the upside testing the CAD defenses at  1.1935, a 78.6 Fib of the 1.1720-1.2733 USD rally, which is further reinforced by the 20-day SMA. Retaliation on the part of Loonie longs will most likely see the greenback retreat toward the 1.1720, a low made by the Canadian dollar bulls during the November of 2004. Indicators are beginning to favor greenback traders with Stochastic and RSI climbing above the oversold level, while MACD and momentum indicator below the zero line continue to support the Loonie traders.

Key Levels & Technical Indicators

AUD/USD - Australian dollar longs began their retreat from the .7700 figure as the pair started slowly to collapse on itself. As Aussie longs head south, the next move will most likely see the pair head below .7678, a level established by the 50.0 Fib of the of the .7991-.7374 USD rally, which is further reinforced by the 200-day SMA. A further collapse of Aussie defenses will most likely see the US dollar bulls push the Australian dollar longs toward the .7604, a 38.2 Fib of the .7991-.7374 USD rally a level 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 Stochastic treading above the overbought line, while positive MACD and momentum indicators continuing to favor Aussie longs.

Key Levels & Technical Indicators

NZD/USD - New Zealand dollar bulls continued to stall for time as the pair remained confined to a narrow trading range with Kiwi bouncing of the .7040 bids. As the price action leans in favor of US dollar, a push toward the psychologically important .7000 handle and a break below will most likely see the pair tumble through the Kiwi's defenses at .6986, marked by the key 38.2 Fib of the .7468-.6681 USD rally. A sustained momentum on the part of the greenback longs will most likely see the pair head 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 Stochastic dipping back below the overbought line adds to the outlook that Kiwi has reached the end of its travel above .7000 territory.

Key Levels & Technical Indicators

Sam Shenker is a Technical Currency Analyst for FXCM.