Technical Overview 

• British Pound Tumbles Through 1.8000
• Euro Breaks Below 1.2200
• Swiss Franc Slows Above 1.2800

Market Outlook
Dollar made a startling comeback after being pushed around by majors as the price action remained extremely volatile during the past few trading sessions. As event risk continues to grow, volatility will most likely be the present in the market for immediate future, making volatility traders kings for a day.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls were in a complete disarray after they have fell into a trap set for them by the greenback longs, which they sprang after the pair failed to advance above the 1.2253, a greenback defensive position established by the 23.6 Fib of the 1.3477-1.1869 USD rally, which is further being reinforced by the 50-day SMA, combined together make for a formidable line of defense for the dollar bulls. As euro bulls retreat below the 1.2200 figure, the next major move will most likely see the dollar push the pair toward the 1.2100 handle with sustained momentum to the downside most likely seeing the pair braking below the 1.2041, a euro defensive position established by July 7 daily high, which currently acts as a gateway to the psychologically important 1.2000 barrier. A break below the 1.2000 handle will most likely see greenback take on the euro bids around the 1.1982, a July 26 daily low. Indicators are favoring the dollar bulls with both momentum indicator and MACD below the zero line, while extremely oversold Stochastic gave the euro bulls a chance for a retrace.

Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs once again were on the other side of the price action as battered greenback bulls managed to muster their forces and successfully defended the 111.00 figure. As the battle between the dollar longs and the yen bulls enters a critical stage, a break above the 112.00 figure will most likely see the greenback longs make their way toward the 112.62, an August 8 daily spike high. A break above will most likely see the dollar longs gather enough momentum and push above the 113.00 figure, thus breaking above the yen defenses at 112.98, a level marked by the July 19 daily high. Indicators are supporting dollar longs with both momentum indicator and MACD treading above the zero line, while overbought Stochastic gives Japanese yen longs a chance to push the pair lower.  

Key Levels & Technical Indicators

GBP/USD - British pound bulls once again became scapegoats for the dollar longs as the pair fell through the psychologically important 1.8000 handle like it did not exist. As greenback bulls gather momentum and continue to charge the sterling positions, a move below the 1.7800 figure will most likely see the pair test the pound bids at 1.7740, a level marked by the, 23.6 Fib of the 1.9214-1.7283 USD rally. A further move to the downside will most likely see the cable bulls unwind their positions and retreat toward the 1.7617, a sterling defensive position established by the July 21 daily low and a gateway toward the psychologically important 1.7500 figure. Indicators are beginning to diverge with momentum indicator below the zero line, while the MACD is sloping downward toward the zero line with oversold Stochastic giving the pound longs a chance to retaliate.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc longs once again had their neutrality thrown back at them as greenback bulls launched a massive counterattack that pushed the pair above the 1.2800 figure. Following the initial shock of the counterattack the Swissie bulls continued to hastily retreat as a sustained break above the 1.2830, a level that marked the most recent swing high, will open the 1.2922, a Swiss Franc line of defense established by the July 29 daily high, for business. As the price action continues to favor the dollar bulls, a further break in the Swissie defenses will most likely see the greenback target the psychologically important 1.3000 handle that currently acts as a gateway toward the 1.3081, a 2005 high, breaking of which might signal a new dollar dominated trend as greenback makes a move toward the next stop on the chart at 1.3226, a level marked by the April 26, 2004 daily high. Indicators continue to favor dollar longs with both momentum indicator and MACD above the zero line. Stochastic became oversold giving Swissie longs a chance to push further into the dollar held territory.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to lock horns with their US dollar counterparts over the 1.1700 figure with neither side claming victory over the other. As the price action escalates and volatility becomes a major factor, a break in the Loonie defenses will most likely see the pair head higher and test the CAD offers around the 1.1818, a level defended by the 20-day SMA. A further collapse of the Loonie defenses will most likely see the greenback take on the Canadian dollar defenses at 1.1999, a level marked by the 50-day SMA. However a victory by the Canadian dollar bulls will most likely see the pair test the US dollar defenses around the 1.1591, a 50.0 Fib Extension of the May-Dec 04 CAD rally with a further move to the downside taking on the 1.1542, a January 1990 Monthly low. Indicators continue to favor Canadian dollar bulls with both MACD and momentum indicator below the zero line. However an extremely 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 decided to give up their habit of revolving around the .7700 figure and retreated below the .7600 figure as greenback longs continued to exert the pressure on the pair. As US dollar longs push the Aussie below the .7600 figure the next move 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 greenback bulls take on the Australian dollar 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 were finally dislodged from their perch on top of the .7000 figure as greenback longs decided to takeover the price action in the pair and managed to push the NZD/USD toward the .6900 figure. A sustained momentum on the part of the US dollar longs will most likely see the pair head toward the .6873, a 23.6 Fib of the .7468-.6681 USD rally. A further move to the downside will most likely see the pair break below the .6800 and head toward the .6773, a July 28 daily low. A further break in the Kiwi's defenses will see the flightless pair tumble toward the .6685, a critical level marked by the 2005 low. Indicators are diverging with momentum indicator below the zero line while MACD is sloping to the downside above the zero line; with neutral oscillators giving either side enough room to maneuver.

Key Levels & Technical Indicators