By DailyFX - EUR/USD * The EUR/USD broke through the 1.2600 figure in early Asia trade today the breakdown ended at 1.2570 well above the...

... prior swing low of 1.2530 setting up a bullish higher double bottom formation.

The pair continues to grind it out in range
between 1.2530-1.2690 zone with volatility compressing sharply over the past week. A
break above the `1.2700 level targets recent double top swing highs near 1.2970, a
break below the key 1.2500 figure however would be ominous to long term euro bulls
invalidating the recent uptrend in the pair.

USD/JPY * USD/JPY finds itself at a tipping point. With the countertrend up move now
extending beyond the 61.8% fibo of the 119.42-109.00 bear wave from 2/03/06-5/17/06
the retrace threatens to turn into a full fledged rally especially if the key 116.00
figure is conquered by dollar bulls. A break though those lines opens up a clear
path to 119.40 for a possible test of a double top. On the other hand yen longs can
take some solace in the failure of momentum confirmed by divergence in CCI which
recently set a lower high on the dailies.

GBP/USD * Of all the anti-dollar majors, cable shows the most constructive technical
structure having broken above its 200 SMA on the hourlies last week. As we go to
print the pair hovers near the average with 1.8400 figure becoming a critical pivot
point. A move below the long term SMA through the 1.8400 targets last week’s low at
1.8355 and invalidates the break to the upside which commenced 6/16/06. MACD
remains negative but the histogram has produced higher lows suggestive of a turn
upward in price.

USD/CHF * The price action of USD/CHF should bring a smile to the faces of
greenback bulls, as the pair stays comfortably above its 200 SMA on the hourly.
Furthermore new swing high set on the MACD suggests a momentum burst higher with
1.2413 now representing final resistance before an assault on the key 1.2500 level.
Thus today’s price levels remain critical to near term direction. A failure by
dollar longs would set in motion a double top that could target recent lows near the
1.2000 level. Break to the upside, however, shows clear sailing to 1.2600-1.2800
zone.

USD/CAD * USD/CAD chart shows one of the cleanest range environments amongst all of
the pairs we cover. The 1.1300-1.0900 zone has been tested 3 times on the top and 3
times on the bottom The most recent price action points to a bias for the big
dollar, especially after Friday’s 138 point up candle. However, only a material
break above the 1.1350 barrier would conclusively signal an upside breakout and for
now odds still favor another test of range.

AUD/USD * AUD/USD continues to look quite ugly for any Aussie longs contemplating a
probative buy at these levels and serves as prime example of the pain of catching
falling knives. The 1.7450 barrier now stands a fierce resistance with both Friday’s
and today’s candles testament to the rejection of those levels. 1.7308 represents
the last line of defense for Aussie bulls and price action would likely have to show
several days of positive closes to substantiate a near term bottom.

NZD/USD * Like a coiled spring continually increasing pressure, NZD/USD trades in
ever more compressed ranges as it forms a clear descending triangle. The usually
bearish formation hints at a break to the downside, but should prices hold the
.6150 level they will have formed a formidable double bottom which could provide
fuel for a another run to the .6400 figure.


By DailyFX