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Forex Technical Analysis

US, Asian along with European stocks over the last session have gained once again on statements made by the billionaire investor states that he wishes to buy into equities even though Bernanke is looking for a slow recovery along with concerns that the unemployment figures are still too high.  Bernanke did also reiterate earlier comments that the economy is now 'out of the recession' and with this a correlation is being seen between the strength of the stocks along with dollar and gold.  However, the two currencies that are moving higher against the dollar, the euro and the yen are still giving the signs that we are not out of the economic mire just yet and that 'caution' is the key for trading over the coming sessions as consumer confidence fell in the US according to ABC/Washington Posts economic data out late yesterday evening.  Data from the UK this morning coming out better than expected giving sterling the lift from the lows of 1.6430, now trading at 1.6510 at time of writing, albeit the unemployment rate has hit the highest level in 14 years for the three months to July adding weight to the consensus that Great Britain is on a very slow path to recovery.
Cable trading for today off the lows of 1.6430, now breaking the 1.65 level.  Should stocks and commodities continue to gain, expect the pound carry the momentum back up to the 38.2% fib ret level for the weeks trading of 1.6535 ahead of the 50% at 1.6575.  Support, should we not see the continuation in the stock market (US futures set to open higher) at 1.6460 ahead of the lows for the day at 1.6430.
Euro still strengthening across the majors other that the Yen.  Currently trading just short of 1.4690 having reached highs of 1.4714 in early European trading.  As with cable, should the stocks continue to drive higher during the US session, expect further gains heading towards the highs in December 2008 at 1.4730.  Consensus is that the euro has been overbought, so expect a sell off over the coming sessions back towards 1.4650 and the 38.2% fib ret level at 1.4620.
The Yen once again the strongest currency across the board in today's trading reaching 90.11 against the dollar, 132.49 with the euro and 148.60 against the pound.  With US equity futures looking to open higher, further downside pressure for the greenback looking to continue into this afternoons trading session.  The next support level for the dollar yen trade is at 89.90 heading for the January lows of 87.45/50.  With the euro having been overbought and being the only currency preventing that move through to those lows against the dollar, a revisit now more likely.
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