By Forex District -The pair is higher but still trades in a tight range as traders are unwilling to take decisive measures as earnings continue to be delivered. EuroZone economic releases were quite positve signaling stabilization is under way. The German Ifo business climate came in at 87.3, higher than the 86.6 expected and the 85.9 reading in June.

Meanwhile, the EuroZone’s flash manufacturing and services PMIs reported an increase to 46.0 and 45.6 in July, respectively. In Germany, the manufacturing PMI rose to 45.2, while in France the manufacturing PMI rose to 47.9. German services PMI increased to 48.4, while in France teh data reported below June’s reading to 45.5.

The news is somewhat encouraging as it suggests the worst of the recession may be over, however the data remains below the level of 50 which indicates contraction.

Looking at the 4hour chart, EUR/USD briefly surpassed the 1.4170 level (50.0% Fib.), on a news reaction, but was able to hold support as risk appetite remains fairly stable. Next key resistance 1.4245, which is testing at the moment, is fairly strong where the pair could pullback. A break above this level will open subsequent targets at 1.4290, followed by 1.4330 and 1.447. The bias is neutral in the near term following the strong economic releases and the markets mixed bias.

The next level of support is the 1.4170, followed by 1.4080 and 1.4012.

Trading levels in play:

There are no solid trade recommendations at the moment for intraday moves.

By FXStreet -

The Dollar is calm across the board. In Wall Street results are mixed: the Dow Jones is down 0.1% and the Nasdaq rises 0.15%. EUR/USD is moving sideways in a small range between 1.4100 and 1.4125. Earlier the Euro rose to a two-week high at 1.4163 but failed to stay above and pulled back to 1.4100. So far today the pair is 0.10% above the opening price.

Valeria Bednarik, collaborator at FXstreet.com affirms: “Still bullish in the daily, pair still remains capped inside the daily triangle, and this far, daily candle is forming a doji, suggesting investors are not sure to take upside chances at current price. Daily close will be key for the pair, as if manages to close above the line, upside pressure could return with coming resistances at 1.4200 this month high, and 1.4337, that will be key for the long term trend in the pair. Close inside triangle, will made investors hesitate further, and correction could approach to the 1.4000 zone in the next 24 hours.”

• EUR/USD

EUR/USD (Jul 16 at 18:26 GMT)

1.4143/45 (0.31%)

H 1.4166 L 1.4052

By Back Bay FX – We have held a long-term bullish view on the USD since the Federal Reserve’s June 24 FOMC statement. Our view has been tested in the early days of July, but we remain convinced that EUR/USD and GBP/USD will fall.

Our reasoning stemmed from the FOMC statement and the actions of the US 10-year Bond Market. To re-iterate our statements of two weeks ago (www.backbayfx.com/blog.php) we believe that the FOMC’s statements would cause bond investors to drive yields significantly lower, thereby causing the USD to strengthen. Our thesis is based on the actions of the 10 year bond and the USD in the aftermath of the Fed’s previous FOMC statement.

In the previous FOMC statement (April 29) we saw the Fed encouraging traders to think that the Fed was looking to raise rates in the US by the end of 2009. The result was a weakening of USD vs EUR and GBP as traders in the bond market sold their bond positions and repatriated their funds, driving up EUR/USD and GBP/USD. We saw the yield on the 10 year bond hit the 4.00% mark for the first time in recent memory.

This FOMC statement led traders in bonds to believe that the Fed would not raise rates anytime soon. We expected that those same traders that were selling bonds and USD last time would come right back and buy USD and then bonds.

We were correct in that the US 10 year bond market has moved significantly higher in price (which moves opposite yield) as yields have hit 3.25% today. This is an astonishing move compared to the historical volatility of the US 10 year bond. BUT we have not seen a correlated strengthening of the USD! There is a breakdown of the relationship between US 10 year bond prices and the strength/weakness of the USD.

Yet we remain committed to our strong USD scenario. Though the bonds have had the majority of their move already, we expect that the USD will catch up soon enough. We may not see the length or strength of movement in GBP/USD and EUR/USD that we saw from the end of April through the end of June, but we will see continued pressure on EUR/USd and GBP/USD to move lower.

The charts below are of both EUR/USD and GBP/USD with highlighted time periods of the last two FOMC statements. We have see the movements of the bond market based on FOMC statements…..this time we are waiting on the USD to catch up.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions for the below images.

We have overlaid the below chart of daily price action in spot Gold with our favorite Bollinger Band (“BB”) settings. Within an overall trend of Gold moving higher, we have noted that recently any break through the midline (currently at 943.50) to the upside has been the start of a strong move higher. Moves through the mid-line to the downside have had limited runs lower.

We are watching where spot Gold closes (17:00 EST) both today and tomorrow to see if we can break higher and go for a strong run that will test the 980 – 1,000 levels. A close above 946 today or tomorrow will be enough to justify a long position for us.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions for the below image.

We have overlaid the below chart of daily price action in spot Gold with our favorite Bollinger Band (“BB”) settings. Within an overall trend of Gold moving higher, we have noted that recently any break through the midline (currently at 943.50) to the upside has been the start of a strong move higher. Moves through the mid-line to the downside have had limited runs lower.

We are watching where spot Gold closes (17:00 EST) both today and tomorrow to see if we can break higher and go for a strong run that will test the 980 – 1,000 levels. A close above 946 today or tomorrow will be enough to justify a long position for us.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions for the below image.

By DailyFX -

The EURUSD, GBPUSD, and AUDUSD key levels remain intact. The US dollar bottoming scenario remains favored.

Euro / US Dollar

There is no change from yesterday as the key level remains intact.  “The poke above 1.4013 dampens confidence in the short term bearish count but does not invalidate it.  Staying below 1.4181 keeps the trend pointed down.  The series of lower highs and lows since 1.4340 may be a series of 1st and 2nd waves.  Under this scenario, the decline from 1.4014 a third of a third (powerful) wave decline.  It is also possible that the current decline is wave 4 of a diagonal from 1.2454 (alternate labels).  A drop below 1.3747 would enable bears to move risk to 1.4014.”

British Pound / US Dollar

1.6626 remains the key level for bears.  The entire decline from 2.1160 is most likely unfolding as an impulse (5 waves) and just 3 waves have unfolded.  The rally from 1.3500, although strong, still counts well as a correction (3 waves).  In fact, price reached and reversed at a former 4th wave (common guideline).  The rally from 1.5800 was an impulse, making it possible that wave v of C was truncated.  Staying below 1.6626 keeps the topping scenario intact.

Australian Dollar / US Dollar

The AUDUSD count shown above is similar to the GBPUSD in that wave v of C may be truncated.  The rally from .7823 is in 5 waves but failed to exceed .8269.  Usually, this would signal that an entirely new bull cycle is underway.  But given the extension of the rallies from .6245 and .6986, this scenario is not probable.  Near term, the decline below .7823 supports the topping scenario as does the structure of the rally from .7786, which is in 3 waves.

New Zealand Dollar / US Dollar

My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag.  Waves A and C are equal, which is common.  The NZDUSD unexpectedly exceeded .6474 Friday, thereby negating the short term bearish structure.  The bearish implications from the aforementioned evidence remain however.

US Dollar / Japanese Yen

The triangle continues to play out.  Wave e of the triangle should complete later this week.  There is potential support at 95.  There is an alternate bearish in which the drop from 101.50 is a series of 1st and 2nd waves.  93.50 defines the trend (above is bullish and below is bearish).  Near term, a rally is likely to begin soon regardless of the larger trend.  The triangle count is bullish from here against 93.50 and if the decline from 98.91 is an impulse (which is what the drop looks like), then a second wave rally could reach 97.20.

US Dollar / Canadian Dollar

I wrote yesterday that “the rally from 1.0782 can be counted a number of ways but to this point there is just 3 waves up from that level.  The risk of at least a correction is high.  Initial Fibonacci support is 1.1330 and structural support extends to 1.1220.”  The USDCAD has entered the triangle price area, which is potential support.

US Dollar / Swiss Franc

The USDCHF spiked below 1.0650 and then reversed violently.  The count shown above is the only viable bullish alternate and 1.0630 is the new trend defining level.

By Daily FX

By Joel Kruger – The cross has been confined to a well defined range trade since early April with the market loosely trading between the 1.5000-1.5250. The way to play this type of price action is generally to look to buy on dips towards the range lows and rallies back to the range highs. One indicator that often proves to be a good entry signal provider for range bound markets are Bollinger Bands.

Bollinger Bands use a set moving average (20-Day SMA) with two trading bands above and below the moving average that are a determined standard deviation away from the moving average. The purpose of the bands is to capture the relative definition of the high and low end of the respective range to allow traders to better anticipate when a market may be subject to a reversal back into the prevailing range. In the above example, we can see the defined range in Eur/Chf with the market now testing the lower Bollinger band. Previous moves into the lower Bollinger had produced good buy entry signals and with the market hitting the lower Bollinger this week, we could once again be poised for a bounce back into the defined range. Look for the latest  break back above 1.5090 to confirm. Wednesday’s bullish outside day is also supportive of constructive outlook. 

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com

By Back Bay FX – EUR/USD has just broken through the bottom it’s recent support line (noted in BLUE on the below image). The start of that support is the same level (1.3780 – 1.3800) as we say as a launching pad for EUR/USD back in late May (see BLUE circle on below image.) We suspect that the pair will re-test those levels by Tuesday of next week.

Importantly, if the 1.3780 level is breached and holds below that for day or so, we suspect that we will see a slow move down towards the 1.3600 level which is the midpoint of a previous range seen in mid-May.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions and Accucharts for the below image.

By Forex District -

Technical oscillators supporting the bullish trend for the USD/CHF currency pair

USD/CHF-market strategy can be a buy from the level 1.0750
Technical oscillators supporting the bullish trend for the currency pair
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines after a bullish crossover below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction.

BY DailyFx.com – The EURUSD and USDCHF patterns suggest that the larger trend is in favor of the US dollar.  However, important levels have been broken in the AUDUSD and NZDUSD and the USDCAD is expected to drop below 1.0780 before a low forms.  At this point, there is no overriding technical theme.

Euro / US Dollar


The EURUSD pattern suggests that the pair is about to plunge.  5 waves down from 1.4340 make up wave 1 or A of a 5 or 3 wave bearish sequence.  The rally from 1.3804 is in 3 waves, which confirms that the larger trend is down.  The minimum objective is below 1.3804 although there is much greater bearish potential.  There is the risk of a push above last night’s high (1.4060) prior to resumption of weakness.

British Pound / US Dollar

The structure of the decline from 1.6667 is not clear but I have been expecting a significant reversal as the rally from 1.3500 is viewed as wave 4 within the 5 wave decline from the 2007 high.  I am not confident in the bearish position against 1.6667 at this point for a number of reasons.  1.  Cable has retraced more than 61.8% of its previous decline and 2.  The rally from 1.5800 to 1.6476 is an impulse (5 waves).  Remaining above 1.6239 keeps the near term trend pointed higher.

Australian Dollar / US Dollar

The AUDUSD rally through .8128 negates the short term bearish bias and leaves the decline from .8269 as just a 3 wave affair, which is corrective.  Also, the advance from .7823 can be counted as 5 waves now although wave 4 is large compared to wave 2.  Continued strength near term would make it more likely that the rally from .7823 is also a 3 wave correction with .7964 as the end of wave b.  Evidence suggests that a triangle or flat is underway from .8269.  .8200 is potential resistance.

US Dollar / Japanese Yen

The triangle continues to play out.  Wave d of the triangle is either complete or in its latter stages.  A decline in wave e could lead to a sharp decline as low as 95 before the terminal thrust in wave C (that will eventually end above 101.50).

New Zealand Dollar / US Dollar

The NZDUSD rally above .6422 negates the near term bearish bias and warns of additional strength.  However, my focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag.  Waves A and C are equal, which is common.

US Dollar / Canadian Dollar

A rally above 1.1475 would be strong evidence that a significant low is in place.  Until then, the USDCAD is vulnerable as wave v of C is expected to end below 1.0782.

US Dollar / Swiss Franc

The USDCHF pattern is the exact same as the EURUSD (but as the inverse) 5 waves up from 1.0589 suggest that an important low is in place.  Favor the upside against there.

Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close.  He is also the author of Sentiment in the Forex Market.

Please send comments about this report to jsaettele@dailyfx.com

We are going to keep an eye on the Canadian Dollar today. The Bank of Canada’s governor is giving a speech today in New York and the text of the speech will be released at 13:35 EST.

Bank of Canada has released statements in the last few weeks that the recent strength of the Canadian Dollar may hurt Canada’s economic recovery prospects.

With this pending speech in mind, we took a look at some charts and found a favorable set up in EUR/CAD. Our chart below seems to be setting up for one of our favorite technical plays, the false break out. We will watch this chart throughout the morning to see if we can confirm a move higher in EUR/CAD (which means a lower Canadian Dollar). If so, we will go long just before the governor’s speech is released.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com