Quiet Week Offers Potential Market Turn

So close yet so far seems to be the recent theme for the potential turn in the markets and U.S. Dollar strength.

Last week offered an initial potential turn in the USD/CHF. This week we will focus on the euro and pound nearing their potential key levels for signs that the current bearish U.S. Dollar moves could be coming to an end.

We suspect that for the rest of the year, the major currencies could trade within some rather wide ranges as we continue to battle between recovery and central banks downplaying growth.

The week is relatively sparse on news events, but we do have CPIs on Tuesday and the BoE / FOMC on Wednesday to look forward to, with focus on the pound and U.S. data.
Most pairs have been trading more USD trends (and by in large USD/JPY) than anything else.

EUR/USD
We continue to maintain our long positions in the euro. It came extremely close last week to switching, but a bounce in the order book keeps us long for the time being.

If we continue to see some strength in the pair, we suspect we could test the 1.3460 then 1.3500 levels, but at this stage we are still nearing rather over bought conditions and the pair could do with a correction.

Our focus is on looking for shorts and particularly for the order book to come off of its aggressive short positioning, either through stop hunting or a more fundamental switch in bias.



GBP/USD
The pound, similar to the euro, looked well on its way to offering some short potential last week, but turned away as we saw further shorting of the pair on Friday.

This pair is now heading towards the Euro style extremes in the order book. We could still see this pair push higher from here and therefore maintain our long positions.

Friday's daily chart offered an interesting price rejection around the 200 Day SMA. This could also point to a move higher in the pair, with a test of the 1.5800 level now looking likely.


AUD/USD
Last week the Aussie finally managed to recover some ground against the USD. Retail Traders are still heavily long on this pair, but we have been coming off of extreme levels. We prefer long positions, using the daily price rejection as our initial turning point.

For this pair to push higher though, it will need to gather more momentum to the upside. We would like to see some larger movements in the underlying order book back towards the short side.

We maintain our long positions in the interim.


USD/CHF
The USD/CHF has now retraced back to its key support levels on the weekly basis. At the end of last week we finally saw a dip in the order book to long this pair (booked profit on shorts from 0.9670).


Although we could easily see a test of the 0.9150 / 0.9050 level in this pair. we do not suspect it will be able to push past the 0.9000 level. Long options this week could offer good risk reward for a USD strengh in the pair, with parity acting as the potential upper range.