Europe
Euro, Pound, Swiss Franc

Last week the European currencies continued their rebound off of the recent lows, and they are now approaching upside resistance. A strong consumer confidence reading from Germany, the Euro zones largest economy, should provide fundamental support at the current levels. Early in the week the markets will likely enter a holding pattern leading up to the U.S Federal Reserve meeting on thursday. The overall consensus estimate is for yet another pause, and this decision is alreay priced into the market. However, the wording of the policy statement is going to be scrutinized for any signs of a future move away from 5.25%.

What does all this mean?

EUR/USD: A trading range between 1.34 and 1.35 is likely to contain this market until Thursday's decision. Long term I still favor the upside of this pair and would look to buy pullbacks near 1.3385.

GBP/USD: After a strong bounce from 1.97, this pair is approaching psychological resistance near 2.00 for the second time in three months. If this market can push above 2.01 it would be a clear indication that the uptrend is still intact, though short term I expect a consolidation between 1.9820 & 2.004.

USD/CHF: This swissy broke down through 1.2350 support and is now re-testing the congestion zone between 1.2240 and 1.2290. This pair has been in a sustained short term uptrend since May, though the recent volatility has made it somewhat of a challenge.

Asia
Yen, Australian Dollar
USD/JPY: This pair has been consolidating between 123.25 & 124 after pushing to multi-year highs on a break above 122. Long term I expect this market to reverse, though I would exercise caution until the Yen shows a clear direction after Thursday's meeting.

AUD/USD: The Aussie has continued its recent push and is yet again near record highs, approaching .8500. In the near term I would short a pop above .8510 with a tight sell stop, as a pullback or consolidation from these overbought levels is likely.

North America
Canadian
USD/CAD: This pair has been trading in a narrow sideways range between 1.0620 and 1.0720. Upside resistance near 1.0790 is an attractive short entry level, with a stop above 1.0820 to manage the risk on this trade.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

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