Technical Overview 

• Euro tumbles toward 1.2100
• British pound struggles to keep 1.8000
• New Zealand dollar dips below .7000

Market Outlook 
Quiet an opening for the majors. Dollar has advanced to the new territory across the board, euro seeing a 1.2000 figure in its future, pound is ready to give 1.8000 for some time, New Zealand dollar finally gave up the .7000 handle.  With dollar strength seen during the last week, its only a matter of time before the greenback gathers enough momentum for another trend that will most likely see the dollar reach the levels not seen since 2003.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls continued to give up more ground as the retreat began to resemble a stampede with dollar longs pushing the pair lower by hitting every bid below the 1.2150 mark. As the price action shift into the higher gear and the pair accelerates its descent, a further move by the greenback bulls will most likely see the pair toward the 1.2100 figure and with a break to the downside seeing the euro longs surrender the 1.2041, a defensive position established by July 7 daily low. A sustained momentum on the part of the dollar bulls will most likely see the vanguard greenback forces attack the psychologically important 1.2000 handle, in a bid to break the euros defenses around the 1.1982, a level marked by the July 26 daily low. Indicators are beginning to diverge with momentum indicator below the zero line while MACD is sloping down toward the zero line. Stochastic became oversold, giving the euro bulls a fighting chance.

Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs were in full retreat after failing to establish a foot below the psychologically important 110.00 level. As the pair continues to head toward the 113.68, a level marked by the 2005 high and a gateway toward the next psychologically important mark at 115.00, a breakout above the 111.46, a 23.6 Fib of the 104.18-113.74 USD rally, will most likely see the Japanese yen relinquish the control of the 112.62, a defensive position established by the August 8 daily spike high. A break above the 112.62 will most likely open the 112.98. a July 19 daily high as a potential target as its currently defends the 2005 high at 113.68. 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 were in for a rude awakening as the pair headed below the psychologically important 1.8000 handle. As cable bulls retreat, a sustained move by the dollar longs below the 1.8000 figure, will most likely see the greenback bulls take on the sterling bids around the 1.7886, a pound defensive position established by the 50-day SMA. As the greenback bulls continue to take the territory away from the pound longs, a sustained momentum to the downside will most likely see the pair test the cable's defenses around the 1.7740, 23.6 Fib of the 1.9214-1.7283 USD rally. A further break in the cable's defenses will most likely see the dollar longs take on the 1.7617, a defensive position established by the July 21 daily low, which currently defends the psychologically important 1.7500 figure. 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 ran out of luck after their bid to push the pair below the 1.2600 figure has ended in a spectacular failure and a retreat above the 1.2700 figure. As  Swissie longs continue to retreat with dollar bulls right behind them, a break above the 1.2800 figure will most likely see the pair head toward the 1.2922, a CHF defensive position established by July 29 daily high. A collapse of the Swiss Franc defenses will most likely see the pair head above the psychologically important 1.3000 handle and target the 2005 high at 1.3081. As greenback longs push above the 2005 high, their next move deeper into the Swissie held territory will most likely see the pair test the offers around 1.3226, a level not seen since April 26, 2004. Indicators are diverging with momentum indicator treading above the zero line and MACD sloping to the upside below the zero line. Stochastic became oversold giving Swissie longs a chance to retaliate against the greenback attackers.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to engage the greenback counterparts in a starring contest with neither side budging a single pip as the pair remains confined to a narrow trading range. 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 continue to support the Loonie with MACD and momentum indicator below the zero line, while neutral oscillators give either side plenty of room to maneuver.

Key Levels & Technical Indicators

AUD/USD - Australian dollar longs continued their retreat from the .7700 figure as the pair started slowly to head toward the south hemisphere. As Aussie longs head lower a move below the .7650 will most likely see the pair test the bids around .7604, a level marked by the 38.2 Fib of the .7991-.7374 USD rally. However a combination of the 50-day and 20-day SMA's will most likely see the Australian dollar longs try to establish a temporary defensive position around .7614-.7630 line. A break below the .7600 handle will most likely see the pair head toward .7512, a level marked by the 23.6 Fib of the .7991-.7374 USD rally, with sustained momentum to the downside seeing the US dollar longs take on the Aussie defenses around 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 finally decided to give up and quietly surrendered the psychologically important .7000 handle to the greenback longs, which did not waste any time and pushed the pair toward the .6986, a level 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 .6934, a 50-day SMA and with a further move to the downside taking on 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 oscillators are heading back below the overbought line adding to the outlook that Kiwi has reached the end of its northbound journey.

Key Levels & Technical Indicators

Sam Shenker is a Technical Currency Analyst for FXCM.