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EURUSD Forecast The EURUSD continued its bullish momentum yesterday, topped at 1.4524 and closed at 1.4507.  The bias is bullish in nearest term, but so far price still unable to make a significant breakout above 1.4520/40 resistance area as you can see on my hourly chart below. So actually from hourly chart point of view, price still trapped in the range area of 1.4520/40 – 1.4436 and need a clear break above 1.4520/40 to continue the bullish scenario testing 1.4577 before targeting 1.4695. On the downside, a failure to make a clear break above 1.4520/40 could lead price to a minor downside correction testing 1.4436 support area. I do not expect any move below that area as it would diminish the current strong bullish bias but as long as price stays above the trend line support my overall intraday bias remains to the upside.

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EURJPY Forecast The EURJPY didn’t make significant move yesterday but had a significant bullish momentum earlier today in Asian session, retesting 113.40 resistance area. The bias is bullish in nearest term but as long as price stays below 113.40 I still prefer a bearish scenario. Short around 113.40 seems to be a good intraday plan for now with a tight stop loss on a clear break above 113.40 as a clear break above 113.40 could trigger further bullish pressure testing the trend line resistance (white) and 114.75 region. Immediate support is seen around 112.50 and the trend line support (red). A clear break below that area could lead price to neutral zone in nearest term testing 111.45 and would reopen the door for another downside attempt retesting 109.45.

GBPJPY  Forecast The GBPJPY made another indecisive movement yesterday. The bias remains neutral in nearest term and there are no changes in my daily technical outlook.

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DJ FXCM Dollar Index

The Dow Jones-FXCM U.S. Dollar index extended the sharp reversal from earlier this month (9661.96), but we should see a correction over the next 24-hours of trading as price action approaches the lower bounds of the downward trending channel. The USD is 0.77% lower on the day after moving 137% of its average true range, and the greenback looks poised to recoup the losses from earlier this week as the relative strength index bounces back from oversold territory. In turn, the gauge should work its way back to the 9450.00 zone, but another leg lower would expose the yearly low at 9337.19. As fears surrounding a U.S. default dampens the appeal of the greenback, market participants may increase their search for an alternative to the reserve currency, and the Swiss franc and the Japanese Yen may continue to outperform as the low-yielding currencies benefit from the risk-off environment.

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Well they’ve done it! Sort of… Clearly the draft deal needs to be ratified, but save for parliamentary and legal hurdles, we should see this deal accepted and implemented over the course of the next few weeks. In summary what’s currently on the table in draft form should satisfy about 80% of all market participant Christmas wish lists. More detail and a small dissection of the draft can be found here. The overall reaction in the market was clearly positive as risk sentiment and equities took a run higher. The EURUSD, the key protagonist in this drama, took a leg up overnight and traded as high as 1.4440 this morning, no doubt taking a raft of small and short-term tops out on its way higher. I will not be giving levels today as I simply don’t see a clear picture of what this market is doing. Let’s be honest, who really knows what is happening…

Elsewhere there were rumours last night that a deal in the U.S. debt ceiling debacle had been reached, but as quickly as they appeared they were dispelled.

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Fundamental Forecast for Canadian Dollar: Bearish

The Canadian Dollar remains firmly anchored to overall risk sentiment trends, with prices closely tracking the S&P 500 benchmark stock index. With that in mind, the tone for the days ahead will be set over the weekend as Republican and Democratic party lawmakers convene anew at the White House to hammer out a deal that will raise the US legal debt limit and formulate a plan to lower the budget deficit over the coming years.

Talks centered on the so-called “Gang of Six” bipartisan initiative that would trim $3 trillion from the shortfall over the next decade broke down on Friday as House of Representatives Speaker John Boehner walked away from negotiations, saying he was unwilling to sign off on tax increases envisioned in the deal.

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