The US dollar was well bid for most of the New York session, but we were lucky to catch a nice, swift sell effort of dollars at the 10:30 hour, perhaps a London fix, to fill our USD/JPY bids. Our EUR/USD offers were never done as a generally offered EUR/JPY put enough selling pressure on the euro to not allow a trade past 1.2725. But the same offered EUR/JPY put enough buying pressure on the yen to allow our 111.40 bids to be done. The initial target of 111.85 came with in a few points of being done, but we remain well bid heading into the Asian opening. We currently trade 111.75 and must keep in the back of our mind the monster gap fill level of 112.55 as the ultimate target.

Let's go back to work on EUR/USD while our USD/JPY trade is working for us. The 2-hour uptrend line originating on April 13 remains the anchor of this seven big figure advance. There are some interesting developments on the 21 period RSI that helps us get our arms around exactly what we are dealing with in terms of this amazing advance. While price ascended through the 21, 22, 23, and 24 handle, RSI was forming a nice uptrend support line of its own. Then, on the first trading day in May, that RSI support was broken. This didn't mean to start selling every euro you could get your hands on, but more so to be alert that the momentum is slowing and we could expect to see new technical evidence of a decline.

Guess what, we are still waiting. What we are waiting for is a break of the support level 50 as illustrated in red to confirm a price trendline break at 1.2660 to get this party started. Without one you can't have the other.

Here is the play for Asia and Eurozone tonight as we trade towards that 1.2660 trendline test. Look to sell that minor 13-minute trendline support turned resistance at 1.2740 and 1.2760 with stops over 1.2775 targeting 1.2660. If you are short and are awake as we approach 1.2660, glance at the 21 period RSI on the 120-minute chart to see if that 50 support looks to be in jeopardy. And as we approach 1.2660, we should probably be closing the USD/JPY gap at 112.45, so look to really tighten up your USD,JPY long stops.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.