• Euro Bounces Around 1.2000
• Swiss Franc Orbits 1.2900
• Canadian Dollar Tries Old Trick

Market Outlook
Dollar bulls remained locked in a tug of war with majors over the key levels, however as we go into the weekend this analyst and trader still thinks that the price action should remain dollar positive next week. However retraces do happen, and the overall price action remains dollar positive, especially with US base interest rate set to peek above 12% over the next three years.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls once again failed to push back the attacking dollar longs as the pair retreated toward the psychologically important 1.2000 figure. As the price action stalls around 1.2000, a pullback toward the 1.2126, a level marked by the August 19 daily low will most likely see the dollar bulls launch a massive counterattack push the pair below the psychologically important 1.2000 handle and with sustained momentum seeing the euro tumble below the 1.1982, a July 26 daily low. As greenback bulls continue their march through the euro held territory, the next move to the downside will most likely see the pair head lower and test euros defenses around 1.1876, a level marked by the 2005 Low. A break of the current 2005 low at 1.1876 will most likely see the single currency surrender further ground to the greenback as it would confirm a dollar dominated trend and see the pair head toward the next major level at 1.1760, a 2004 Low. Indicators are favoring the dollar bulls with both momentum indicator and MACD below the zero line, while extremely oversold Stochastic adds to a trending outlook as most prolonged moves to the downside happened after oscillators became oversold.
 
Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs remained in a tight consolidation range as all of their attempts to break below the 113.00 figure unsuccessful as dollar bulls continued thus negating any yen attempts on retaliation.  As greenback longs resume their advance toward 113.68, a 2005 high and a gateway to the psychologically important 115.00 handle, a break above will most likely see the dollar longs head toward the Japanese yen defenses around 114.92, a 2004 high. A break above the 114.92 will most likely see the greenback bulls push the pair above the psychologically important 115.00 handle and take on the yen defenses around 115.76, a level marked by the September 4, 2003, thus negating the progress made the Japanese yen longs since late 2003. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, while overbought Stochastic most likely acts as a confirmation for the possible trend that started around the 109.00 handle.  

Key Levels & Technical Indicators

GBP/USD - British pound bulls once again were on the receiving end of the dollar's wrath as the pair tumbled below the 1.7600 figure after the fabled retrace failed to materialize. As dollar longs continue to assert their dominance, the next move will most likely see the pound forces hastily retreat below the psychologically important 1.7500 figure, with a break below surrendering the 1.7417, a July 26 daily high to the vanguard greenback forces. A further collapse of the sterling's defenses will most likely see the pair tumble toward the 2005 Low at 1.7284, which currently acts as a gateway to the 1.7086, a level marked by the November 20, 2003 daily high. Indicators favor the dollar bulls with ADX above 25 signaling trending conditions, while momentum indicator and MACD below the zero line, with oversold Stochastic adding to the out look that the price action will most likely remain on the side of the dollar longs.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc longs remained trapped within a tight trading range as both sides remained deadlocked around the 1.2900 figure. As greenback longs resume their advance toward the psychologically important 1.3000 figure, the next move by the dollar bulls will most likely see the pair advance toward the Swiss Franc defenses around 1.3081, a level marked by the 2005 High. A sustained break to the upside will most likely see the dollar longs push the pair toward the 1.3226, a CHF defensive position established by the April 26, 2004 daily high. However a pullback toward the 1.2786, would give overextended greenback bulls a chance to regroup and launch another major offensive targeting the psychologically important 1.3000 handle. Indicators continue to favor dollar longs with both momentum indicator and MACD above the zero line. Stochastic remains extremely oversold thus adding to the trending market outlook.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to engage the US dollar counterparts as the price action remained confined to a tight trading range. As the USD/CAD continues to trade around the critical levels, a successful counterattack by the US dollar longs will most likely see the pair head higher and break above the 1.1776, a level marked by the 20-day SMA. The next move to the upside most likely seeing the greenback push the pair against the Canadian dollar defenses around 1.1830, a level marked by the September 19 daily high. A further advance by the greenback will most likely see the Loonie retreat toward 1.1890, a level established by the 23.6 Fib of the 1.2735-1.1629 CAD rally. However a pullback below the 1.1700 handle will most likely give the greenback traders chance to cement the support above the multi year low and push the pair higher. Indicators continue to favor Canadian dollar bulls with both MACD and momentum indicator below the zero line, while neutral oscillators give US dollar longs enough room to maneuver.

Key Levels & Technical Indicators

AUD/USD - Australian dollar longs continued to spin their wheels as the pair failed to gain momentum above the .7600 as pair came upon the dollar defenses around .7605, a level marked by the 38.2 Fib of the .7991-.7374 USD rally. As the greenback bulls continue to consolidate their recent gains, the next US dollar attack will most likely see the Australian dollar longs fall back toward the .7514, a level marked by the 23.6 Fib of the .7991-.7374 USD rally. A next move to the downside will most likely see the pair head toward the .7457, an Aussie defensive position established by the August 31 daily low, thus breaking below the psychologically important .7500 figure. A sustained momentum on the part of the greenback longs will most likely see the pair head toward the .7368, a 2005 low and a gateway to the next psychologically important level at .7000. Indicators are favoring the US dollar bulls with both momentum indicator and MACD below the zero line. Stochastic became oversold, thus giving the Aussie longs a chance for a pullback.

Key Levels & Technical Indicators

NZD/USD - New Zealand dollar bulls continued to lay siege around .6920, a level housing greenback defenses established by the August 22 daily low. As the price action heats up and US dollar bulls manage to pluck few of the Kiwi's feathers, the next move to the downside will most likely see the pair head toward the .6800 figure. A break to the downside will most likely see the pair head toward the New Zealand dollar defenses around .6773, a July 28 daily low, with a further break in the Kiwi's defenses seeing the NZD retreat toward the .6685, a critical level marked by the 2005 low, breaking of which will most likely see the pair test the NZD bids around .6591, a level marked by the September 1, 2004 daily high, which currently acts as a gateway toward the psychologically important .6500 handle. Indicators favoring the US dollar bulls with both momentum indicator and MACD below the zero line; with oversold Stochastic adding to the outlook that the prolonged movement to the downside is here to stay.

Key Levels & Technical Indicators

Sam Shenker is a Technical Currency Analyst for FXCM.