Technical Overview

• Euro Makes Move Above 1.2200
• British Pound Climbs Back Above 1.8000
• Swiss Franc The Leads Majors

Market Outlook
Dollar hastily retreated as emotionally charged market made a quick work of the greenback bids with the majors retaking the levels lost during the previous few trading sessions.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls came out in full force and retaliated against the dollar longs as they pushed the pair above the 1.2200 figure during the latest bout of anti-dollar bearishness. As the price action temporally switches sides, a failure to gain momentum above the 1.2200 handle will most likely see the euro retrace the initial move and break below the 1.2100 figure, which provided temporary support for the single currency longs. A break below the 1.2100 level will most likely see the dollar rally resuming its course and target the bids around the 1.2041, a euro defensive position established by July 7 daily high. 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 extremely oversold Stochastic gives the euro bulls a fighting chance.

Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs once again tried to retake the territory lost to the dollar bulls during the last few trading session as they pushed the pair toward the 111.50 mark, which is being defended by the 23.6 Fib of the 104.18-113.74 USD rally. A failure to break to the downside will most likely see the Japanese Yen bulls once again feel the wrath of the greenback longs with the pair retreating above the 112.00 handle. A sustained momentum on the part of the dollar bulls will most likely see the pair take-on the yen defenses around 112.62. a level marked 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 overbought Stochastic give Japanese yen longs a chance to retaliate.  

Key Levels & Technical Indicators

GBP/USD - British pound bulls managed to stage a massive counterassault against the unsuspecting greenback longs and in a single swoop pushed the pair back above the psychotically important 1.8000 handle. As the dollar longs get ready to retaliate, the price action in the pair is reaching a critical state, a failure by the cable bulls to push above the 1.8100 figure, will most likely constitute as a counterattack failure and will once again give the battlefield advantage to the greenback longs. As the greenback longs renew their counter attack and push the pair once again below the 1.8000 figure, their next target will most likely going to be the pound bids around the 1.7919, a defensive position established by the 50-day SMA. A further break to the downside 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.. Indicators are beginning to diverge with momentum indicator below the zero line, while the MACD is sloping downward toward the zero line with neutral oscillators give either side plenty of room to maneuver.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc longs continued to push their luck as they made their way toward the 1.2700 figure, which Swissie bulls gave up to the dollar bulls during the last few days of trading. As the price action grinds to a halt, a failure by the Swiss Franc longs to push below the 1.2700 figure will most likely see the greenback bulls come out in force and push the pair above the 1.2800 figure. A move above the 1.2800 will most likely see the pair target the Swissie offers around 1.2922, a level marked by the July 29 daily high. A further move by the dollar bulls 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 continue to favor dollar longs with both momentum indicator and MACD above the zero line. Stochastic became oversold giving Swissie longs a fighting chance.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to engage the US dollar bids during the latest push below the 1.1700 figure, thus pushing the pair into the territory not seen since the early 1990's. As the pair remains confined to a narrow trading range the next move by the greenback longs will most likely see the pair head back above the 1.1700 figure and target Loonie offers around the 1.1750 line. A break above the 1.1800 will most likely see the pair head toward the 20-day SMA at 1.1841. Indicators continue to favor Canadian dollar bulls with both MACD and momentum indicator below the zero line. However an oversold Stochastic is giving the US dollar longs a chance for a pullback that can turn into a pivot.

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 continued to gravitate toward the .7000 handle after the Kiwi joined the other majors in a massive counterattack against the US dollar. However a failure to break above the .7000 figure will most likely add to the cause of the greenback longs as they gather en masse and push the New Zealand dollar longs below the .6986, a level marked by the key 38.2 Fib of the .7468-.6681 USD. A sustained momentum on the part of the US dollar longs will most likely see the pair head toward the .6942, 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.