Technical Overview

• Euro Test Bids Above 1.2000
• British Pound Dips Below 1.7500
• Swiss Franc Bounces 1.2900

Trader's Outlook
Dollar remains a weapon of choice In the currency market, but it all comes down to selecting the proper targets, you don't want to miss because a miss in any market will cost the trade and unless you are an institutional trader with a lot more resources, this trader believes that the ammunition should be saved. Wars are won by fighting, but the conflict can be resolved by one well placed hit, so choose your targets carefully and don't shoot yourself when pulling the "trigger" on a trade.

1-Day Currency Pair Outlook

EUR/USD - Euro bulls gave up more ground to the advancing dollar longs as greenback forces managed to take back the territory that was lost during the last week's anti-dollar rally. As the pair once again approaches the psychologically important 1.2000 handle, a collapse of the single currency defenses will most likely see the greenback bulls push their way toward the 1.1979, a level marked by the September 27 daily high. A further collapse of the euros defenses will most likely see the dollar longs make their way toward the 1.1876, a critical level marked by the 2005 low, with further breakdown targeting the 1.1760, a 2004 low and a gateway to the psychologically important 1.1500 handle. Indicators are favoring the dollar bulls with both momentum indicator and MACD below the zero line, while neutral oscillators give wither side enough room to maneuver.
 
Key Levels & Technical Indicators

USD/JPY - Japanese Yen longs remained confined to a tight trading range as the price action continued to orbit the 114.00 handle. A move to the upside will most likely see the greenback longs take on the 114.92, a 2005 high and a gateway toward the psychologically important 115.00 handle, and with a further move to the upside most likely seeing the pair head toward the 115.76, a level marked by the September 4, 2003, thus negating the advance made by the Japanese yen longs for the past two years. However given a narrow channel setup that has dominated the price action in the pair since September, a break to the downside will most likely see the Japanese yen longs take on the greenback defenses around the 113.00 figure and with sustained momentum to the upside taking on the dollar defenses around 112.62, a level marked by the August 8 daily high. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, however an overbought Stochastic gives the yen longs a chance to retaliate.

Key Levels & Technical Indicators

GBP/USD - British pound bulls felt the earth part beneath as the pair tumbled through the psychologically important 1.7500 handle and headed straight for the cable defenses around 1.7417, a level marked by the July 26 daily high. As the price action shifts gears and begins to approach the 1.7284, a 2005 low and a gateway toward the psychologically important 1.7000 handle, the clash between the dollar bulls and the pound longs will most likely become highly volatile as the loss of the 2005 low by the sterling longs will most likely see the pair break below the 1.7000 figure and test the sterling defenses around 1.6904, a level marked by the June 17, daily high, a price not seen by the pound longs in over tow and a half years. Indicators favor the dollar bulls with momentum indicator and MACD below the zero line, with oversold Stochastic gives the cable bulls a chance to retaliate.

Key Levels & Technical Indicators

USD/CHF - Swiss Franc longs were in full retreat after falling into the dollar trap that greenback longs sprang on the unsuspecting Swissie bulls, which hastily retreated toward the 1.2900 handle. As the dollar longs once again set their sights on the psychologically important 1.3000 handle and push the pair higher, a break above 1.2900 will most likely see the greenback longs take on the Swiss Franc defenses around 1.2914, a level marked by the October 6 daily high. A further collapse of the Swissie defenses will most likely see the greenback take on the 1.3081, a Swiss Franc defensive position established by the 2005 High. A further move by the dollar longs will most likely see the pair head toward the 1.3226, an April 26, 2004 daily high, thus seeing the dollar reach the levels the pair has not seen in over a year and a half.  Indicators favor the dollar bulls with momentum indicator and MACD above the zero line, with neutral oscillators giving either side enough room to maneuver.

Key Levels & Technical Indicators

USD/CAD - Canadian dollar bulls continued to consolidate within a tight trading range with neither side giving an inch of maneuvering room the pair orbited the 1.1750 level. 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, a level marked by the 2005 low at 1.1594. 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 began to diverge with momentum indicator dipping below the zero line while positive MACD is sloping down toward the zero line; with neutral oscillators giving either side enough room to maneuver.

Key Levels & Technical Indicators

AUD/USD - Australian dollar longs remained in a tightening range as the Aussie bulls failed in each attempt to break above the greenback defenses protecting the .7600 handle. As US dollar longs pull their forces and attack the Australian dollar positions, a move lower will most likely see the pair head toward the .7514, a level marked by the 23.6 Fib of the .7991-.7374 USD rally, and with sustained momentum to the downside likely seeing the pair gain momentum and make its way toward the .7457, an Aussie defensive position established by the August 31 daily low, thus breaking below the psychologically important .7500 figure. A further move to the downside will most likely see the greenback longs push their way toward .7368, a level marked by the 2005 Low. Indicators are favoring the US dollar bulls with both momentum indicator and MACD below the zero line with neutral oscillators giving either side enough room to maneuver

Key Levels & Technical Indicators

NZD/USD - New Zealand dollar bulls came under pressure as the greenback longs decided to push the Kiwi of its perch below the .7000 handle as NZD longs overstayed their welcome above the psychologically important .6500 handle. As NZD longs give up their territory, 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. A further collapse of the Kiwi's defenses will most likely see the pair head toward the .6773, a New Zealand dollar defensive position established by the July 28 daily low. . Indicators are favoring the US dollar bulls with both momentum indicator and MACD below the zero line with neutral oscillators giving either side enough room to maneuver.

Key Levels & Technical Indicators

Sam Shenker is a Technical Currency Analyst for FXCM.