Technical Overview

• Euro Tests 1.2200
• Swiss Franc Touches 1.2700
• Japanese Yen Lags The Majors

Market Outlook
Dollar gave up significant territory ahead of the monthly event risk, however the data will most likely skew the market as it will most likely will be impacted by the Gulf of Mexico hurricanes. This trader and an analyst advises to stay out of the market, unless the individual trader already running a profitable position, my advice is to close all of the losing positions in order to avoid compounding loses. There are no hopes and dreams in the market, just reality, no mercy and no illusions.  

1-Day Currency Pair Outlook

EUR/USD - Euro bulls maintained the momentum of their initial advance with the price action stalling upon reaching the 1.2200 figure. As retrace continues a move above the 1.2200 figure will most likely see the single currency longs push their way toward the 1.2253, a level marked by the 23.6 Fib of the 1.3477-1.1869 USD rally. A further break in the dollar's defenses seeing the euro bulls push their way toward the 1.2376. However given the event risk a reversal from these levels will most likely see the euro longs retreat toward the 1.1979, a level established by the September 27 daily high. 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 chance to retaliate.
 
Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs continued to lag the advance made by the other majors as the pair remained confined to a trading range. As the price action continues to consolidate, a move to the downside will most likely see the pair head toward the 113.00 figure and with a break to the downside testing the dollar defenses around 112.62, a level marked by the August 8 daily high. A further break in the greenback defenses will most likely see the yen bulls extend the retrace toward 111.78, a dollar defensive position established by the August 31 daily high, with retrace will most likely running its course around the 111.50 mark. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, while overbought Stochastic gives the yen longs a chance to retrace part of the dollar rally.

Key Levels & Technical Indicators

GBP/USD - British pound bulls continued to pound the dollar defenses, but saw the momentum of their advance wane into nothingness as the price action stalled around the 1.7800 handle. As the price action enters a consolidation mode, a move above the 1.7800 figure will most likely see the pound bulls push their way toward the 1.7859, a level marked by the 20-day SMA and with sustained momentum heading straight for 1.7973, a 50-day SMA and a gateway to the psychologically important 1.8000 handle.  A move above the 1.8000 figure will most likely see the cable longs take on the greenback defenses around 1.8018, a level marked by the 38.2 Fib of the 1.9219-1.7284 USD rally. Indicators favor the cable bulls with ADX above falling below 25 signaling the end of trending conditions, while momentum indicator and MACD below the zero line, with neutral oscillators adding to the outlook that the price action currently favor the pound longs.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc longs were in charge of the price action as the pair led the charge against the dollar positions, managing to push deep into the greenback territory. As the price action pauses around the 1.2700 figure, a move to the downside will most likely see the Swiss Franc longs push their way toward the 1.2668, a 50-day SMA, with a break below most likely seeing the pair head toward the psychologically important 1.2472 figure, a level marked by the 38.2 Fib of the 1.1492-1.3085 USD rally. Indicators continue to favor dollar longs with both momentum indicator and MACD above the zero line, while neutral oscillators give either side enough room to maneuver.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to clash with the greenback longs as the price action stalled around the 1.1800 figure with neither side managing to make much progress. If the US dollar bulls fail to recover and pullback toward their defensive positions, the next move by the Loonie will most likely see the pair head below the 1.1700 level and with further momentum take on the greenback bids around 1.1600 figure. In case the Loonie longs fail to launch a counterattack and retreat above the 1.1800 figure, the next move by the US dollar bulls will most likely see the pair head toward 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 once again failed to break the greenback defenses protecting the .7600 figure as Aussie longs failed to gather enough forces to punch through the US dollar defenses. As greenback longs push Australian bulls below, a retreat back down toward the .7514, a level marked by the 23.6 Fib of the .7991-.7374 USD rally, will most likely see the pair gain momentum and most likely see the Australian dollar retreat toward the .7457, an Aussie defensive position established by the August 31 daily low, thus breaking below the psychologically important .7500 figure. 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 found out that the resourcefulness is not enough extremely resourceful as they failed to keep the pair above the .7000 figure. As Kiwi loses more feathers, a move toward the .6900 figure will most like see the pair head below and test the New Zealand dollar defenses at .6868, a level marked by the 23.6 Fib of the .7468-.6681 USD rally. However given the risk event, a move above the .7000 handle will most likely see the Kiwi longs on the greenback defenses around .7010, a level marked by the September 13 daily high. A further break to the upside will most likely see the NZD longs test the US dollar offers around.7078, a level marked by the 50.0 Fib of the .7468-.6681 USD rally, which is further reinforced by the 200-day SMA. Indicators remain in favor the US dollar bulls with both momentum indicator and MACD below the zero line, while neutral oscillators give either side enough room to maneuver.

Key Levels & Technical Indicators

Sam Shenker is a Technical Currency Analyst for FXCM.