• Euro Tumbles Below 1.2000
• British Pound Sees 1.7500
• Japanese Yen Heads Above 114.00

Market Outlook
Dollar finished consolidating its recent gains and advanced against the majors across the board, posting new 2005 high against the Japanese yen as the pair broke above 114.00. However the overall feel for the market remains heavy, and while the trend mode remains, a new outlook emerges that the market may not be ready for a trend and another retrace might be in works. However a break of the summer ranges will most likely see the dollar remain in a trend mode.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls remained on a menu as the pair slid below the psychologically important 1.2000 figure with greenback longs setting their sights on 1.1876, a 2005 Low. As dollar bulls continue to capture more of 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. A further break in the single currency defenses will most likely see the pair test 1.1633, a level marked by the June 4, 2003 daily 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 once again became a prey to the dollar bulls as greenback longs managed to push the pair above the 114.00 handle, thus establishing a new 2005 high during another bout of USD bullishness. As the price action remains in favor of the greenback longs, the next move to the upside will most likely see the pair head toward the Japanese yen defenses around 114.92, a 2004 high. A break above the 114.92 will most likely see the dollar longs 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 A further advance by the greenback bulls will most likely see the Japanese yen longs try to mount a defense around 116.67, a level marked by the July 15, 2003 daily high. 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.  

Key Levels & Technical Indicators

GBP/USD - British pound bulls found themselves starring at the psychologically important 1.7500 handle after another attempt to push back the dollar bulls ended in failure. As the pair continues to head lower, a break of the 1.7500 figure will most likely see the greenback head below the 1.7417, a July 26 daily high, with a further collapse of the sterling's defenses will most likely seeing the dollar bulls advance 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. A break below the 1.7084 will most likely see the pair test the bids around the next psychologically important 1.7000 figure. 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 once again retreated above the psychologically important 1.3000 figure after the greenback longs awoke from their slumber and resumed their advance, with the next move by the dollar bulls will most likely seeing 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 Swiss Franc defenses established by the April 26, 2004 daily high, with further collapse of the CHF defenses seeing the greenback take on the Swissie offers around 1.3389, a level marked by the October 6 daily high. 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 decided to press their luck one more time as Loonie longs launched a surprise attack against the US dollar positions, with the pair stalling around 1.1595, a level marked by the 50.0 Fib Ext of the May-Dec 04 CAD rally. As both sides remain deadlocked, a move below the current level will most likely see the pair head toward 1.1542, a greenback defensive position established by the January 1990 monthly low. However a reversal from current levels will most likely see the US dollar test the Canadian dollar positions around 1.1762, a level marked by the 20-day SMA, with a further move to the upside testing the Loonie defenses around 1.1830, a level marked by the September 19 daily high. 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 advance past the US 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 continue to gravitate toward the .6900 handle as any attempts to break above the .6943, a level marked by the September 30 daily high, were rebuffed by the greenback longs. As US dollar bulls manage to push the pair lower, the next move to the downside will most likely see the Kiwi longs retreat 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 remain in favor 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.