Technical Perspective - SRO - Majors/Cross Rates

With the continued uncertainty of the directions in the financial markets; a technical perspective of the chart formation for the European currency pairs and the USD Index would be appropriate at this time. Setting aside the fundamentals for the time being; the USDX has moved lower back to the 73.80 levels and the bearish outlook on a day to day basis remains strong. These levels on a weekly Stochastics/RSI overlay proves to be vulnerable for a near term directional trend lower that would threaten the support levels. We, however would not be surprised whenever this happens prompting our trade team to take a speculative trade in anticipation of this market movement.

An inverse reflection is found also with the EURUSD chart formation. And the anticipated move shows the recovery of the Euro and the British Pound as heading North and may build momentum / volumes for the next few trading days ahead. currently at the 1.4439 and 1.6385 as of this writing. Although, the degree of difficulty has not change at all and the continued volatility would be seen ahead where a probable breakout would occur between the Euro, Pound and the US Dollar simultaneously. This market analysis would have to consider the Euro to react on the GDP numbers for the 2nd qtr.and the ECB as well.

The weekly MA-Long Divergence more the EURGBP Cross rate has indicated a positive tone for technical trades to be implemented prompting the influential movements for both the Euro and Cable to move higher. Although, we are inclined to believe that this has been a speculative curve for a probable weakness of the USD moving forward. No such confirmation however, it would be priced-in when the US dollar does move lower.

We would still prefer to cross trade the Pound, Euro with the cross rates at this time but would not disregard the Japanese Yen and Swiss Franc. Although, both currency pairs have to be treated as isolated cases since the fundamentals are entirely two different situations compared with the European and US market conditions. Meanwhile, the opening price gap of the USDCHF in the Asian sessions where technically sound and in line the previous candlestick formation encircled on the chart that already showed a signal of price reversal before hand.  With the market sentiments from the SNB contentions of taking similar action in the market whenever necessary shows its grip on the recent prices. With prices opening at the 0.7898/00 from a Friday closing price of 0.7767 should not be discounted. the market price movement is critical for the next couple of trading days. However, a retracement or pullback is expected and this would have been a technical adjustment from any oversold areas for the past few weeks of bearish price direction.