After four distinct October efforts to get the EUR/USD below 1.2500 on any kind of sustained basis, the dollar longs finally cried uncle and hit the eject button. Dollar longs began liquidating following US economic data, as well heightened tensions with North Korea, driving EUR/USD up through 1.2580 and 1.2620 resistance levels, as we currently consolidate at 1.2635. We are currently 25 points below the level that in my opinion, is the deciding factor that tells us if this a full-fledged dollar failure, or just a euro short covering rally in the grand scheme of the longer-term downtrend.

You'll find .618 retracement resistance lining up with trend channel resistance at 1.2660. Further, this level was the scene of the crime on that dreaded Friday NFP that saw EURUSD immediately higher after the release, only to suddenly reverse grabbing every stop in sight 100 points lower.

USD/JPY is already at the Friday NFP break up level, due to the weak October EUR/JPY, but is facing a more technically significant decision point at 117.50, than EUR/USD 1.2660. You'll find .618 Ret at 117.51, measured move AB=CD at 117.58, as well as trend channel support in the area of 117.50 . Both 117.50 and 1.2660 are critical decision points for the dollar trend in the remainder of Q4. I would like to sit back and watch price action at these levels, as well as price reaction to further news about North Korea, the coming elections, and more economic data before we formulate our next trade.

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

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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.