Technical Analysis for Major Currencies

EURO

The Euro versus Dollar was able to breach the resistance level at 1.4200 yesterday to head higher nearing our suggested target at 1.4375. Momentum indicators show the pair being overbought which supports the downside correction to retest the above mentioned level where this decline on the intraday basis will occur after reaching the 1.4385 resistance level. We expect the pair to decline to 1.4245 – 1.4215 at the very least before determining the trend.

The trading range for today is at the key support at 1.4105 and the key resistance at 1.4620.

The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120

Support: 1.4280, 1.4245, 1.4180, 1.4145, 1.4110
Resistance: 1.4385, 1.4440, 1.4490, 1.4540, 1.4615

Recommendation: According to our analysis, sell the pair below 1.4385 with targets at 1.4245 and stop loss with four hour closing above 1.4440

GBP

The Cable continued to extend its gains in the markets to breach the key resistance at 1.6530 and gradually incline as it nears the critical resistance on the short term 1.6675 (61.8% correction for the decline from 1.8668 to 1.3500). We expect the pair to decline on the intraday basis to 1.6490 where from there we are to watch the price action closely to determine whether the pair will decline to 1.6185.

The trading range for today is among the key support at 1.6185 and the key resistance at 1.6945

The general trend is to the upside as far as 1.4840 remains intact with targets at 1.4840 and 1.6600

Support: 1.6550, 1.6490, 1.6445, 1.6375, 1.6345
Resistance: 1.66640, 1.6675, 1.6700, 1.6770, 1.6835

Recommendation: According to our analysis, sell the pair below 1.6675 with targets at 1.6490 and stop loss with four hour closing above 1.6770

JPY

The 95.35 support level (61.8% correction) was able to limit losses for the USD/JPY pair. The positive signs seen on the momentum indicators may result in heavy fluctuations within a narrow range today before gathering enough momentum to support our decline to breach the above mentioned support and target 93.40 and 92.40

The trading range for today is among the key support at 91.90 and the key resistance at 99.40

The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60

Support: 95.35, 94.75, 94.50, 94.10, 93.40
Resistance: 96.25, 96.55, 97.40, 97.70, 98.10

Recommendation: According to our analysis, sell the pair below 95.35 with targets at 94.50 and stop loss with four hour closing above 95.95

CHF

The key support for the downside channel at 1.0585 stopped the Dollar versus Swissy pair as it was pressured by momentum indicators. The current support level are pivot levels for the general trend where as far as trading remains above it the trend it to the upside yet a breach to the downside will take the pair to 1.0370 and then far to levels below 1.0000.

The trading range for today is among the key support at 1.0450 and the key resistance at 1.0980

The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245

Support: 1.0585, 1.0530, 1.0500, 1.0470, 1.0450
Resistance: 1.0625, 1.0690, 1.0715, 1.0745, 1.0800

Recommendation: According to our analysis, buy the pair above 1.0585 with targets at 1.0745 and stop loss with four hour closing below 1.0500

CAD

The Dollar versus Loonie pair declined where trading is currently below the key support for the downside channel where we expect the decline to continue towards 1.0660 before extending towards 1.0300. We may witness a slight upside correction at any time to 1.0900 yet the general trend is to the downside as far as 1.1335 is intact.

The trading range for today is among the key support at 1.0660 and the key resistance at 1.1335

The general trend is to the downside as far as 1.1870 remains intact with targets at 1.0300

Support: 1.0785, 1.0725, 1.0660, 1.0615, 1.0565
Resistance: 1.0825, 1.0900, 1.0940, 1.0960, 1.1030

Recommendation: According to our analysis, sell the pair below 1.0825 with targets at 1.0725 and stop loss with four hour closing above 1.0900

Fundamental Analysis
Markets seemed to consolidate on Tuesday to digest those Monday gains, and near term, a move in either direction is a possibility. If risk aversion does rear it's ugly head and force some USD strength and stock weakness, I would look to buy a steep dip into the mid to low 1.4100's on EUR/USD or 920-930 on the S&P 500 as a good point to get long for a turnaround later in the day or into Thursday. If we start reasserting the uptrend with clear breakouts higher, keep trading along with the momentum and avoid picking tops since that practice has been a bit rough as of late. Gold and silver are still working on topping out, so as I said yesterday, it's an ok time to start to get short for the medium to long term trade, but there might be a bit of a bumpy ride holding short near-term. Australia GDP came in much higher than expected helping Oz to avoid a technical recession. AUD/USD managed a nice 55 or so pip gain on the news and could push higher with some help from a weaker USD. For Wednesday:

0428 UK Services PMI (49.5 expected) - We've had 5 consecutive months of higher releases and better than expected figures here, so expect a bit of pre-news optimism on this release.
If it comes out at 50.5 or higher, GBP/USD should rally 50 pips somewhat easily.
If it comes out at 50 or higher, it's a bit more speculative, but GBP/USD should still have some buying pressure.
If it comes out at 48.6 or lower, GBP/USD should sell off 50 pips.

0815 US ADP Employment Change (-525 expected)
If it comes out at -425 or higher, EUR/JPY should rally 50 pips
If it comes out at -625 or lower, EUR/JPY should fall 50 pips

1000 US ISM Non-Manufacturing Composite (45.0 expected) + Bernanke Testimony - The number may give EUR/JPY a small push with a deviation of 1.5 or more, but attention will likely be more focused on Ben Bernanke's testimony to the House Budget Committee. There will likely be a prepared statement released at 10am EST or shortly thereafter, so I would recommend focusing on the testimony rather than blindly trading the ISM Non-Manufacturing number (still take it into account though).

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