Article originally published on innerfx.com and republished here with permission
Confidence is 10% hard work and 90% delusion. ~ Tina Fey
Good morning. Euro fell further against its counterparts as S&P downgraded France, Austria, Italy and Spain by one notch, but it kept Germany’s AAA rating level.
It seems that last consolidation cycle has come to an end as the dollar rallied on S&P’s downgrade. More upside is likely and it’s probably best to buy dips as long as there is no sign of trend exhaustion
Euro had a good chance to extend the recovery above $1.29 which was under pressure on Friday’s European trading session but S&P’s downgrade triggered a strong selling. The entire 1.28-1.29 zone is now providing resistance, so keep an eye on it if euro recovers.
The recovery is intact although silver pulled back on Friday. Intraday charts still look bearish but the daily suggests more bullishness on a short-term basis. However, recovery is still very weak if we compare current upside range to September’s sell-off
last bounce confirms the uptrend once again and as I mentioned in some previous reports, it’s best to look for buying opportunities in case of pullbacks and breakouts, as long USDCHF seems to be one of the best bets in the first part of 2012
The weekly chart is more interesting as the dollar recovered more than half of the entire decline started in 2010 and next obvious target is the 61.8% of the said decline which is around parity level.
EURCHF continues to trade in a narrow range, approaching SNB’s fixed floor at 1.200. A good plan is to maintain pending buy orders above current trading levels, as they should be triggered in the event of a new intervention of any kind.
Last euro’s sell-off doesn’t affect AUDJPY that much, so it remains in range between 78 and 79.50. Buying on the potential break above 79.50 is still a scenario to consider