Dollar On The Cusp Of A Comeback?


After struggling to cross major Resistance at 1.30, the EUR after a week and half retreated back below 1.30. The EUR will look to find Support at the 100 day MA. However, a solid close below that level will likely put the EUR on its heels. If however, the EUR can find Support at the 100 day MA, EUR bulls will wait for a close back above recent highs at 1.33. Lastly, yesterday’s price action took the EUR below trend line Support and that will certainly happen during a bull run, but an extended break below trend line support often hints at possible weakness starting to build in.


The volatility on this pair continues without any signs of letting up. A week and half ago the CAD finally closed below major Resistance in the 100 day MA and continued its march towards parity until meeting up with the next level of strong Resistance at 1.0150. This was the same level the CAD reached on its last cross below the 100 MA. After 4 straight losing sessions the CAD finally just broke north of the 50, 100 and 200 MA’s. So long as the CAD does not set a new high above 1.0550 or a worst case scenario above 1.0650, volatility can keep the CAD bulls in the game, as it just as easily could swing right back. However, the next move lower will have to come with more resolve as bulls may be skeptical that the CAD will be able to break through Resistance at 1.0150, thereby implying that the CAD move may be capped. A capped break entices less buyers into the market.


The CHF is approaching major Support at 1.06. We discussed this level yesterday, as generated with the Fibonacci Retrace tool. A close above 1.06, would likely trigger stops on the other side and send the USD cascading higher towards a 1.08 handle. On the flip side, 1.03 represent major CHF Resistance so a close lower would keep the CHF bulls in the game. However, a close above 1.06 will quickly have them closing longs to cover their positions. A number of weeks ago we discussed the large Head & Shoulders pattern potentially building and that some technicians are waiting for a pull back to 1.08 followed by a resumption to overall trending lower to take the CHF towards parity.

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