Technical Overview

• Euro Loses 1.1700
• Japanese Yen Eyes 120.00
• New Zealand Dollar Aims For .6900

Traders Corner
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EUR/USD - Euro bulls remained in a tight trading range as the price action continued to revolve around the 1.1700 handle with neither side making any decisive moves. A move to the downside will most likely see the dollar longs once again push the pair below the 1.1700 handle and take on the euro defenses around 1.1653, a level marked by October 22 daily low with sustained momentum to the downside most likely seeing the greenback bulls taking on the single currency defenses around 1.1546, a level established by the October 17, 2003 daily low and a gateway toward the psychologically important 1.1500 handle. A break below the 1.1500 figure will most likely see the pair head toward the 1.1379, a level established by the November 7, 2003 daily low, at which point the dollar longs will most likely consolidate their gains before continuing their advance. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while extremely oversold Stochastic gives the euro bulls a chance to retaliate.

USD/JPY - Japanese Yen longs lost the staring contest and quickly retreated above the 118.00 handle and found themselves with striking distance of the psychologically important 120.00 handle, a price level not seen since 2003.  A further move on the part of the greenback longs will most likely see the pair break above the 119.00 figure and target the Japanese yen offers around 119.81, a level marked by the August 19, 2003 daily high. A sustained momentum on the part of the dollar longs will most likely see the yen bulls retreat above the 120.00 handle and try to mount a counter attack around 120.72, an August 1, 2003 daily high.  Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, with ADX above 25 at 39.70 signaling an existence of a maturing trend not a direction of one, while overbought Stochastic and RSI both adding to the trending outlook.

GBP/USD - British pound bulls continued to keep the pair the pair around the 1.7400 figure as the price action remained within vicinity of the 2005 Low at 1.7284. Retaliation on the part of the cable bulls and a move to the upside will most likely see the pair head above the psychologically important 1.7500 handle and test the dollar offers around 1.7605, a level established by the 20-day SMA. A subsequent reversal will most likely see the pair collapse through the 1.7500 level and aim for the 2005 Low at 1.7284, and with a break below target the sterling bids around 1.7086, a level marked by the November 20, 2003 daily high. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while overbought Stochastic give the sterling longs a chance to retaliate.

USD/CHF - Swiss Franc longs managed to push the pair back below the 1.3200 figure as the pair continued to set new 2005 highs. A move to the downside will most likely see the Swiss Franc bulls push their way below the 1.3000 figure and aim toward the 1.2957, a 20-day SMA, with a break below most likely stalling around 1.2803, a level marked by the 23.6 Fib of the 1.1484-1.3211 USD rally. A reversal from these levels will most likely see the pair head back up above the 1.3000 figure and target the new2005 high. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while overbought Stochastic gives the Swissie longs a chance to retaliate.

USD/CAD - Canadian dollar bulls once again pressed their luck too far and failed pushed the pair below the 1.1900. A retaliation by the greenback longs will most likely see the pair head toward the 1.2027, a level established by the 38.2 Fib of the 1.2730-1.1592 CAD rally, thus seeing the Loonie bulls give up the control to the psychologically important 1.2000 handle. A further collapse of the Canadian dollar defenses will most likely see the greenback take on the Loonie offers around 1.2159, a 50.0 Fib of the 1.2730-1.1592 CAD rally. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while neutral oscillators give either side enough room to maneuver.

AUD/USD - Australian dollar bulls continued to push the pair higher toward the US dollar defenses around .7385, a level marked by the 23.6 Fib of the .7798-.7267 USD rally, following the inability by the greenback longs to gain momenutm below the .7300 handle. A move toward the .7385 will most likely see the Aussie bulls lose their footing and tumble back down toward their defensive position at .7263, a level established by the fresh 2005 Low, with a further move to the downside most likely seeing the pair tumble toward .7224, a level marked by the October 19, 2004 daily low. Indicators are diverging with momentum.  Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while oversold Stochastic gives the Aussie bulls a chance to retaliate.

NZD/USD - New Zealand dollar bulls continued to push the pair toward the greenback positions around .6870, a level established by the 23.6 Fib of the .7468-.6681 USD rally. A break above the .6900 handle will most likely see the US dollar longs launch a counterattack against the Kiwi bulls and push the pair back below the .6800 figure, with greenback longs taking on the New Zealand dollar bids around 6773, a level established by the July 28 daily low. A further break to the downside will most likely see the pair tumble toward the .6687, a 2005 Low. Indicators are favoring the US dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators give either side enough room to maneuver.
 
Sam Shenker is a Technical Currency Analyst for FXCM.