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US Dollar Range to Yield to Bullish Momentum Against Major Currencies.

The US Dollar has been consolidating in narrow ranges against the major currencies, but positioning is favoring a stronger greenback as the breakout materializes. We maintain our short exposure against the Euro, British Pound and Australian Dollar, adding a new trade selling the New Zealand Dollar against its US counterpart. EUR/USD Strategy: Short at 1.3936, Targeting 1.2922 Weekly Profit / Loss: -131 pips We sold EURUSD at 1.3936. While last week's head-and-shoulders scenario did not pan out, prices are little changed having consolidated in a well-defined range below 1.4141. The bearish bias noted following the Dark Cloud Cover setup we saw in early June has not been violated and we will remain short, looking for prices to take out the range bottom at 1.3742 as EURUSD heads to the previous swing low below 1.30. As before, a stop-loss will be activated on a daily close above the 06/03/09 wick high at 1.4340. For more resources on the EURUSD, please visit the DailyFX Euro Currency Room. GBP/USD Strategy: Short at 1.6274, Targeting 1.4990 Weekly Profit / Loss: -70 pips The bottom line for GBPUSD has been little changed since we sold the pair at 1.6274. Prices have continued to inch along resistance-turned-support marked by the upper boundary of a rising channel that had been broken May. The pair has now issued an Inverted Hammer and moved lower, hinting that bearish momentum may finally be ready to accelerate. We will continue to hold our short position, initially targeting 1.4990. A stop-loss will be activated on a daily close above the 06/03 wick high at 1.6667. For more resources on the GBPUSD, please visit the DailyFX British Pound Currency Room. USD/JPY Strategy: Flat USDJPY positioning is effectively unchanged from what we noted last week: an Evening Star below resistance in the 99.12-100.60 price congestion region bolsters the possibility of a forming Head-and-Shoulders top with a neckline near 93.52. As before, resistance is reinforced by the upper boundary of a falling channel, strengthening the case for a bearish scenario. A break of the neckline would serve as confirmation, opening a selling opportunity to capture a decline to the low at 87.10. For more resources on the USDJPY, please visit the DailyFX Japanese Yen Currency Room. USD/CAD Strategy: Pending Long As we noted last week, USDCAD continues to test resistance at a falling trend line established from the swing top in early March. We will keep monitoring prices closely, looking to enter long on a conclusive close above this juncture (now at 1.1603) to target a return to 1.30. Near-term support is seen at 1.1453. For more resources on the USDCAD, please visit the DailyFX Canadian Dollar Currency Room. AUD/USD Strategy: Short at 0.7896, Targeting 0.6949 Weekly Profit / Loss: -131 pips We sold AUDUSD at 0.7896. We now notice a clear Three Inside Down bearish reversal pattern on a second attempt to test resistance at the June swing high, bolstering the case for forthcoming downward momentum. We will remain short, continuing to target a decline to the previous swing bottom at 0.6949. A stop-loss will be activated on a daily close above the 06/03 wick high at 0.8269. Near-term support is seen at a rising trend line established from the swing low in early March, now at 0.7921. For more resources on the AUDUSD, please visit the DailyFX Australian Dollar Currency Room. NZD/USD Strategy: Short at 0.6305, Targeting 0.5522 Last week, we wrote that the New Zealand Dollar was testing support at the bottom of a rising channel that has guided the pair higher since risky assets (including high-yielding currencies) began to rebound in early March. NZDUSD has now broken below the lower boundary of this channel while showing a Three Black Crows bearish reversal signal, a formidable sign of continued downside ahead. We will enter short from here, initially targeting April's swing lows at 0.5522. A stop-loss will be activated on a daily close above 0.6601, the 06/02 wick high. For more resources on the NZDUSD, please visit the DailyFX New Zealand Dollar Currency Room. To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at ispivak@dailyfx.com

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Publication:Mena Report
Date:Jul 3, 2009
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