Our hunch that EUR/USD below 1.2500 was a deadly dollar bull trap was on the money. EUR/USD squeezed 100 points off the low bringing the 1.2630 level we discussed below into play. Mr. Bernanke hinted that inflation was somewhat contained bringing the chances of a August hike to 60-40%.

While EUR/USD is working its way higher into the 1.2630 level, USD/JPY put in a nice channel break setting up a short dollar play upon a re-test of the channel at around 117.40.

We look to get short USD/JPY at the .618 retracement at 117.45 with stops above the .786 at 117.72. The target will be the late-June breakout level of 116.70.

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.