Dollars 2 Euro

The GBPUSD looks vulnerable but it is difficult to short without a point of reference to place a stop. It is best to wait for a top to form and then short a bounce.

EURUSD – Euro Forecast to Gain Versus U.S. Dollar
GBPUSD – British Pound Turnaround May Be on the Horizon
USDJPY – Japanese Yen Positioning Remains
USDCHF – Swiss Franc May Continue to Strengthen against Dollar
USDCAD – Canadian Dollar Forecast to Break Below Narrow Range
GBPJPY – British Pound Forecast to Advance Against Yen

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The Euro and Pound have continue to find support as signs of sustainable growth in the region and dissipating concerns over the banking system and sovereign debt have spurred bullish sentiment. The EUR/GBP has started to consolidate as the stalemate between the currencies continues.

While the downtrend is not as strong as I normally like to see, the current SSI reading of +4.41 does signal the potential for more selling pressure.

Longer term trends in the Yen crosses are bearish but I can't rule out near term strength just yet.

Germany’s unemployment rate fell to 7.6 percent for the month of July from 7.7 percent the previous month to mark the lowest since November 2008. At the same time, the number of people out of work tumbled 20K, following a revised 20K decline in June.

The Euro pared the decline from the previous day and rallied to a fresh monthly high of 1.3091 during the overnight trade, and the single-currency may continue to retrace the decline from earlier this year as the economic docket reinforced an improved outlook for the region.

Overnight the next 24 hours, market participants will closely monitor the NZDUSD as the pair maintains its narrow range ahead of the RBNZ rate decision. A rate increase by the central bank in conjuncture with hawkish comments may lead price action to test 0.735, with a break above exposing 0.742. Yesterday, our long USDCAD position hit our target of 1.0346 before reversing course, while our short AUDUSD finally triggered to profit 60 pips.

We have yet to see any market reversals just yet, and the USD is back under pressure against most of the major currencies, with the latest surge led by demand for Eur/Usd which has now broken to yet another fresh multi-day high.