Technical Overview

• Canadian Dollar established a new multi-year low
• Euro finds bids around 1.2150
• Australian dollar once again tests .7700 offers

Market Outlook
Dollar stalls and that is healthy, there can never be substantial gains without consolidation of the previous ones. Canadian dollar continues to surprise as it broke below the multi year low above 1.1700, however given the current market conditions, recent price action in the Loonie, Aussie and Kiwi is most likely unsustainable in a medium term and the market should see the reversal of fortune for the Commodity Block majors.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls received temporary relief from the attacking dollar longs as the pair temporarily paused its descent above the 1.2100 figure. A next move by the dollar bulls will most likely see the pair head toward the psychologically important 1.2000 figure with greenback longs breaking below the 1.2041, a euro 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, with a break below taking on the euro bids around 1.1982, a level marked by the July 26 daily low. Indicators are favoring the dollar bulls with both momentum indicator and MACD below the zero line, while oversold Stochastic gives the euro bulls a fighting chance.

Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs continued to hold the dollar advance as the pair failed to gain a foothold above the 111.50 level, currently defended by the 23.6 Fib of the 104.18-113.74 USD rally. As the price action remains subdued, a jump in volatility will most likely see the greenback longs spring into action and attack the Japanese yen positions in a bid to break above the 112.00 figure and with a break to the upside seeing the pair head toward 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 which currently acts as a gateway toward 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 went back to their peaceful slumber after being awakened by the greenback attack which almost succeeded in pushing the pair below the psychologically important 1.8000 figure. As cable longs once again lose their diligence and drop their defenses, greenback longs will most likely take an advantage of this development and once again will try to push the pair below the psychologically important 1.8000 level. A break below the 1.8000 handle will most likely see the greenback bulls take on the sterling bids around the 1.7886, a defensive position established by the 50-day SMA. 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 managed to halt the dollar advance right at the 1.2800 figure, with the greenback bulls temporary falling back. As the greenback longs resume their advance against the Swissie bulls, a break above the 1.2800 level will most likely see the pair make its way toward the 1.2922, a CHF defensive position established by July 29 daily high. A further 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 won the starring contest and in a blink of an eye pushed the US dollar bulls below the 2004 low and established a low not seen since 1991. As the Loonie continues to probe lower, the next move toward the 1.1600 figure will most likely see the CAD set its sights on the next round of greenback defenses around the 1.1591, a level marked by the 50.0 Fib Extension of the May * Dec of 2004 CAD rally. A break below that level will most likely see the pair test the multi-year low 1.1542, a low not seen since January of 1990. 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 made another futile attempt to retake the .7700 figure and push the greenback longs back. A further move to the upside will most likely see the pair head higher, however the higher the pair moves the more attractive its will become for the potential greenback longs as the price action for the most part sided with the US dollar. As US dollar bulls muster their forces and push the pair back below the .7650 and 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 once again pushed their luck as they bounced off the support established by the .6986, a level marked by the key 38.2 Fib of the .7468-.6681 USD rally, and climbed back above the psychologically important .7000 figure. 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.