Approximately 1 month ago I outlined the potential for a significant downside move in the US Greenback (upside for the Euro and Cable). This week, the objectives for the Euro (ECM6) and Pound (BPM6) of 12700-12900 and 18400-18600 were hit with intraday highs of 12731 and 18503 respectively. The US Dollar Index (DXC) tagged 8948 with 8900-8950 a strong support area.
So where do we go from here? It appears time now for at least a consolidation with the potential for retracements. On the Euro, watch for a sub-12650 daily close to confirm the move; on the Cable, sub-18400 will be a sing of weakness; and finally DXC, above 8625-35. If these levels are breached, expect the Euro, Cable and US Dollar to find support (resistance) at roughly 12474-12500, 17975-18025 and 8715-8735. Tests to these levels will setup a retest back to at least the recent highs (lows on the Greenback). Stay tuned!
05.17.06 at 14:14:27
[...] With the upside objectives met last week, I suggested that the upside move was nearing a short-term top and the forex and debt markets were setting up for a retracement. A period of stagnation is likely now as the market awaits the results of the two-day FOMC meeting on Tuesday and Wednesday. The news decision will be announced at approximately 1415ET, 05.10.06. A summary of the major crosses follows. [...]