Following is a selection of comments from analysts on important technical developments in the foreign exchange market:
EURO/DOLLAR: There are finally tentative signs that the recent move lower in this pair may have run its course, opening the way for renewed euro gains. This move has been very similar in depth to that seen in the January-February correction.
The euro traded below the 1.2478 support level by 22 pips only to recover strongly and post a bullish key day reversal. A rally of similar magnitude to that seen from the 1.1640 low would be a logical expectation. That was a 685-pip move which, if replicated, would suggest a move toward 1.3141, very close to our existing short-term target of 1.3125 and the 76.4 percent pullback level of 1.3160/90.
DOLLAR/YEN: The pair continues to probe the downside following Wednesday's outside day at the upper Bollinger band. It appears that Thursday's rally to 117.11 was the choppy second wave of a larger 3 wave correction that could ultimately take the pair lower to a confluence of fibo supports - notably the combination of the 23.6% of 108.96-117.88 and 50 percent of 113.43-117.88 at 115.66/79.
A push lower would then target the confluence of the 38.2% of 108.96-117.88 and 78.6 percent of 113.43-117.88 at 114.39/48. Resistance is at former intraday supporting this morning at 116.54.
DOLLAR/SWISS: There is an upward sloping channel that is forming on the daily chart from the 1.1919 low and the supporting line comes in at 1.2255 (the trendline increases roughly seven pips per day).
Bullish divergence with RSI on the hourly along with RSI in oversold territory argues for a bounce in the near term. The July 18 and 19 lows at 1.2444/47 are immediate resistance.
DOLLAR/CANADIAN: Weaker-than-expected Canadian CPI prompted sharp spike from 1.1300 to 1.1344 as the North American market opened after broad-based USD weakness triggered stops below 1.1275 overnight. Support at 1.1283 should attract short-term buying pressure for an attempt to pierce resistance around 1.1334 and extend gains to 1.1359.
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