Technical Overview

• British Pound Sees 1.7000 In Its Future
• Swiss Franc Gets Ready To Retreat To 1.3500
• Canadian Dollar Fails To Recapture 1.1900

EUR/USD - Euro bulls continued to bounce in a tight trading range as the pair cautiously climbed above the 1.1700 handle. A move to the downside will most likely see the greenback bulls push the pair below the 1.1700 handle and take on the single currency 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 euro bids 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 once again found themselves with the striking distance of the psychologically important 120.00 handle after their attempt to push the pair below the 119.00 figure met with heavy greenback opposition.  A further move on the part of the dollar bulls will most likely see the pair 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 41.39 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 tread sideways as the pair remained within the vicinity of 1.7284, a level marked by the 2005 Low. A further attack by the greenback longs will most likely see the pair head lower and through the 2005 Low at 1.7284, and with subsequent move further targeting the sterling bids around 1.7086, a level marked by the November 20, 2003 daily high. A further advance by the greenback longs will most likely see the pair break below the psychologically important 1.7000 handle and target the pound bids around 1.6877, a level established by the November 28, 2003. 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 once again pushed the pair back below the 1.3200 figure after the pair set new 2005 high at 1.3243. A further move to the upside will most likely see the price action remain in favor of the greenback longs and see the pair target the Swissie offers around 1.3389, a level established by the October 3, 2003 daily high. A sustained momentum on the part of the greenback longs will most likely see the dollar bulls head above the psychologically important 1.3500 figure and tackle the Swiss Franc defenses around 1.3525, a level marked by the September 29, 2003 daily 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 felt the full brunt of the counterattack launched by their US dollar counterpart as greenback longs once again pushed the pair toward the psychologically important 1.2000 handle. A break above the 1.2000 figure will most likely see the pair test Loonie's defenses around 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 failed to push the pair higher as weight of the US dollar defenses became to much for the Aussie longs to carry. A move below the .7300 handle will most likely see the Aussie bulls retreat 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. A sustained momentum on the part of the greenback bulls will most likely see the Australian dollar longs give up more territory as they retreat toward the .7133, a level established by the August 14, 2004 daily low. Indicators are signaling trading conditions with ADX above 25 at 31.71, signaling an existence of a trend, not a direction of one, while both momentum indicator and negative MACD remain below the zero line, with oversold Stochastic adding to the trending outlook.

NZD/USD - New Zealand dollar bulls failed to gain further ground as the price action stalled ahead of the greenback defense around .6870, a level established by the 23.6 Fib of the .7468-.6681 USD rally. Retaliation by the US dollar longs against the Kiwi bulls will most likely see the greenback push the pair back below the .6800 figure, and with sustained momentum seeing the pair 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 signaling trading conditions with ADX above 25 at 25.50, signaling an existence of a trend, not a direction of one, while both momentum indicator and negative MACD remain below the zero line, with neutral oscillators give either side enough room to maneuver.

Sam Shenker is a Technical Currency Analyst for FXCM.