We will continue to play the recent dollar weakness, but we're shifting gears a bit away from USD/JPY and over to EUR/USD. The EUR/JPY strength lately is irrefutable and while being short dollars, you're swimming upstream, so to speak, by being short USD/JPY. We have a nice run with USD/JPY. but EUR/USD should get some help if EUR/JPY pushes through 145.50

EUR/USD has found support from March 5 highs of 1.2600 completing correction wave A.

Provided EUR/USD can chew through the 1.2650-70 offers and pop out of that little consolidation pattern formed just above the old March support levels, Wave B should be completed at .618 Retracement of V-A at 1.2800.

For tonight, look for EUR/USD to push through the minor resistance line up to 1.2700, followed by a retracement back towards 1.2670-60 to get long. Stops should be under 1.2735 and scale out on the way up when your unrealized profit equals your initial risk, but be sure, if you can, to keep a piece for the move towards the pending, and spectacular, failure at 1.2800.

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

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