A selection of comments from analysts on important technical developments in the foreign exchange market.
US DOLLAR/CANADIAN DOLLAR: "The Canadian dollar's bull run shows no sign of abating, though a moderate dollar rebound cannot be ruled out. Not surprisingly, daily oscillators show the US dollar is oversold. but medium-term trend signals indicate the US dollar bear momentum is intact, which means we are more likely to see the market trade lower."
"Intraday, support is at C$1.2610/15. If we do see a breakdown below that point, we are likely to see a rapid move to C$1.25. C$1.25 is psychologically important for Canada because it is 80 US cents. On the topside, if there is a pullback to C$1.2765, I would expect to see selling interest."
EURO/DOLLAR: "We've seen some significant progress in the euro this week. A weekly close above $1.2256, trendline resistance drawn from the February high, would suggest continued upside testing in the medium term. That $1.2256 then should become strong support. As we've broken out of a consolidation phase both in the euro/dollar and the dollar index, there are indications that like last year we are likely to see a fairly rapid sell-off in the US dollar toward the latter part of the year."
DOLLAR INDEX: "On the index, the recent drop to 88.11 on a monthly basis in September is the lowest monthly close since March for the dollar index. Technical patterns do suggest that what we've seen since the start of 2004 is a fairly significant consolidation in the underlying dollar bearish trend and if this (move lower) is sustained over the next couple of weeks we could (see) a fairly rapid sell-off this year. For this to reverse, we would need the index to go back through 89.50.
EURO/DOLLAR: "It's too easy to get carried away with being too dollar bullish or dollar bearish.
We've been in a range since March and until we break out of that range one way or the other, it's not time yet to say we are bullish or bearish."
"We had a lot of lows in May and June, the euro even got below $1.20 and everyone said this is it, the dollar will get strong.
Now, if we go above $1.25, which has been a range high that will be a breakout. If a range breaks, you usually go quite a distance. But at this time I think a little patience is probably warranted. We peaked in July in the upper $1.24 level, and also saw that level in February. We rallied this week and got up to the $1.24 handle, but now the euro is struggling."
AUSTRALIAN DOLLAR/NEW ZEALAND DOLLAR: "The Aussie/Kiwi on a recent dip went to the NZ$1.05 support level that it has held since the mid 1970s. Every time we've gotten down there, which happened in 1979, 1988 and 1995, it gave rise to really strong rallies."
US DOLLAR/CANADIAN DOLLAR: "I think the downside is limited, and that the next big move on dollar/Canada is higher.
I see warning signs that (the Canadian dollar) is running out of steam down here, but would wait to see evidence of a squeeze." Currency bid prices at 1:31 pm EDT (1731 GMT).
All data taken from Reuters calculated from the levels at 4:30 pm EDT (2030 GMT) in the previous New York session.