Japanese Yen Falters, Aussie and Kiwi Take Over
â€¢ Euro Trapped in Range
â€¢ Japanese Yen Weakness Prevails
British Pound Downside Bias
â€¢ Swiss Franc Dragonfly Reversal Candle
Canadian Dollar Consolidation May Take USDCAD Higher
â€¢ Australian Dollar
â€¢ New Zealand Dollar Surges Through Resistance
EURUSD â€” The EURUSD is range bound, trapped in a very tight 1.3180-1.3120 zone which either presages consolidation or rollover. The price action continues to be inconclusive, but for now the 1.3183 (61.8 Fib of the retrace move from 2006 highs) level remains a cement ceiling for the pair and only a power move through that area will turn the bias to the upside.
USDJPY â€” The upward momentum in USDJPY has been halted by the 50% Fibo of the 1/26/07-2/16/07 decline off the yearly highs but the bullish engulfing suggests that price action may barrel on higher. A failure however opens the way for a double bottom retest of the recent low at 119.00.
GBPUSD â€” The pound price action though choppy retains its upward bias for the time being, however the compression of volatility suggests a powerful resolution to direction in the near term. Note the three lower highs in combination with three higher lows as price converge on the 1.9550 level. For the time being the more powerful downward bias of lower highs continues to support a short bias, but a break of 1.9650 would negate that view forming a far more constructive picture for cable bulls.
USDCHF â€” As we noted yesterday, â€œUSDCHF has staged a lower Bollinger Band breakout and if the candle holds the highs for the day then it suggests that the pair is ready for a turn to the upside.â€ The action on the 4 hour charts supports the dollar bullish view with a powerful dragonfly reversal candle indicating that the near term sell off may be over. An upside break of 1.2392 point to 1.2550 as possible target while most immediate support resides below the lows of the dragonfly at 1.2339.
USDCAD â€” Yesterday we stated that â€œUSDCAD remains in a very tight bear flag formation with volatility decreasing to near standstill levels. A break above 1.1660 may target the 1.1723 38.2 Fib retrace level of the current down trend.â€ The prices reached 1.1715 before pausing and now remain in consolidation pattern. A hold of the most recent lows of 1.1689 could push USDCAD higher for a possible retest of the 1.1759 near term high. A break those levels however, could pull the pair all the way down to support at 1.1620.
AUDUSD â€” The Aussie has broken the downward trend line demarcated by three lower highs that we pointed out yesterday and now looks to target the 7938 high set on 1/23/07. A fall below the 7852 trend line break would suggest the upward thrust was a fake out but for now the bias in the pair is up.
NZDUSD â€” The Kiwi price action continues to be constructive as the pair grinds its way to the 7095 swing high set on 1/03/07. Having cleared the most recent resistance at 7032 the pair maintains positive momentum however a break of the days lows at 6987 would completely change the dynamic and suggest that the pair has made a intermediate term top.
Kathy Lien is the Chief Currency Strategist at
Forex Capital Markets. Kathy is responsible for providing research and analysis
for DailyFX, including technical and fundamental research reports, market
commentaries and trading strategies. A seasoned FX analyst and trader, prior to
joining FXCM, Kathy was an Associate at JPMorgan Chase where she worked in Cross
Markets and Foreign Exchange Trading.