By DailyFX – EUR/USD * Euro bulls simply have not let up and the pair currently hovers around the 1.2800 figure. On Friday morning,… … we remarked that
“EUR/USD gained for the 16th day in 20 yesterday [last Thursday],
which has happened on two separate occasions since the advent of the
euro.” We entered unprecedented territory after the Friday close when
EUR/USD gained for the 17th day in 20. However, slowing momentum is
illustrated by CCI on the daily now residing below 100. A continuation
of strength past 1.2770 targets the confluence of the 2/18/2004 high /
161.8% extension at 1.2927/31. The 61.8% fibo of 1.3474-1.1640 resides
at 1.2773 along with the 138.2% fibo extension of 1.1640-1.2331 from
1.1825 (1.1825 + 138.2% * (1.2331-1.1640). This confluence has held the
euro at bay for the last 3 days but a break would expose the 61.8% of
1.3666-1.1640 at 1.2890.

USD/JPY * USD/JPY has traded back below 111.00 and now rests at the
61.8% fibo of 104.18-121.38 at 110.77. The trend down is strong as
evidenced by ADX above 50 for the first time since November towards the
end of the run to 121.38. Looking back at November, ADX crossed above
50 on 11/17 when USD/JPY was at 118.80 and the ended up rallying another
140 pips before correcting. Initial support is the mentioned 61.8% fibo
at 110.77 with additional losses exposing the 7/21/05 low at 109.85.
Positive divergence with MACD and RSI on the hourly suggests a
correction is imminent but keep in mind that corrective moves lately
have been small. Still, resistance stems from the 5/1 low at 112.33 as
well as the 10 day SMA at 112.78.

GBP/USD * Cable rallied above its
Fibonacci extensions of 1.7046-1.7934 from 1.7229 at 1.8660 (161.8% *
(1.7934-1.7046) + 1.7229 = 1.8660) and closed just above it yesterday at
1.8664. The pair had made new 2006 highs at 1.8727 this morning.
Interestingly, the last time that the pair traded to such levels was
5/12/2005 * almost exactly one year ago. What's more is that the pair
has gained for 9 consecutive days. This has happened one other time in
the last 10 years, and that was from 11/19/04 to 12/01/04 and very near
the end of the rally to 1.9536 (12/16/04). This morning's high at
1.8727 is immediate resistance and yesterday's low at 1.8514 is initial
support.

USD/CHF * USD/CHF has also plummeted some more,
finding support at the 61.8% fibo of 1.1473-1.3283 at 1.2167. CCI
crossed above -100 and is above the -100 figure for the first time since
4/17 when the pair traded 600 pips higher. The combination of slowing
momentum (represented by CCI) as well as support from the mentioned fibo
level makes a strong case for a short term bottom. Also interesting is
that ADX is at its highest since December 2004, or the end of the
massive dollar decline. While anything above 30 denotes a strong trend,
readings above 50 are rare and suggest that the move is overextended.

USD/CAD * USD/CAD made a massive outside day yesterday * first testing
the 5/2 high at 1.1166 and then plunging through the 161.8% fibo of
1.1297-1.1771 at the psychological 1.1000. The pair has since rallied
back above 1.1000. Like USD/CHF, ADX is > 50 and has not seen current
levels since May 2003 when the pair had just completed its first leg of
the multi-year decline from 1.6000. Upon declining back below 50,
USD/CAD did correct from 1.3400 to 1.4180. Of course, history tends to
rhyme more so than simply repeat so use the information presented merely
as a guide. The next major support in our eyes is the 200% fibo of
1.1297-1.1771 at 1.0825. If the pair can distance itself from 1.1000,
then resistance is at the confluence of yesterday's high / 5/2 high at
1.1164/66.

AUD/USD * AUD/USD tested the .7740/45 level again
yesterday and again this morning. Due to this “ceiling” from the 5/5,
5/8, 5/9 and now 5/10 (so far) highs, the intraday charts are plagued
with a double top as well as massive negative divergence between price
and oscillators * all suggestive of a near term top at .7040/45. A
break below yesterday's .7632 low would expose the 1/31, 2/1 highs at
.7585. Daily oscillators favor a continuation of the contra move as 21
day RSI has turned down from above 70 and CCI down from above 100. A
resumption of strength targets the 6/21 and 6/22 highs at .7808.

NZD/USD * Kiwi continues to weaken through .6250. The pair has
fallen through both the 20 and 50 days SMA's near .6300 and is rapidly
approaching the 4/25 low at .6229. A break below there exposes the 50%
fibo of .5991-.6443 at .6216. RSI (21 period) has fallen below its 50
midpoint on the daily and MACD is looks poised for a negative cross just
above its 0 line. Bearishness is bolstered by the fact that the last
two days have taken out the previous 8 days' lows but a bounce
encounters resistance at the 4/27 low of .6267 as well as yesterday's
low at .6313.

Jamie Saettele
Technical Currency Analyst
Forex Capital Markets LLC
New York, NY 10005
Tel (212) 897-7660
Fax (212) 897-7669
Toll Free 888-503-6739
jsaettele@dailyfx.com