By Mohammed Isah of fxtechstrategy.com
NEW YORK (
) -- Currency traders had a challenging week as many currency pairs made wild swings.
The outlook for the euro-dollar (
) currency pair remains lower toward the 1.2555 and the 1.2456 levels as it has faced bear pressure since breaking through the 1.3113 level on Tuesday. The currency pair's decline from 1.3310 to 1.2520 remains supportive of the broader medium-term downtrend that was initiated from the 2009 high at 1.5143.
The pound-dollar (
) currency pair is also on the path of weakness, breaking through its key support zone at the 1.5127/25 levels and testing a low of 1.4473 on Friday. Although a hammer candle pattern (which we are suspicious of) is now in place and suggests a loss of downside momentum, the broader risk remains lower.
The dollar-yen's (
) corrective pullback that started at the 94.85 level expanded on Thursday, pushing the currency pair to a low of 88.23 before the it recovered higher to end the week at 91.56. The 92.72 and the 91.58 levels are very important to the pair's short-term uptrend that started at the 84.80 level. Therefore, as long as dollar-yen trades below those levels, there is the risk of lower prices.
The Australian dollar-dollar (
) currency pair now maintains a bearish tone in the near term after it collapsed through its key support at the 0.8999 level this past week and traded as low as 0.8704. Its medium-term uptrend that started from the 0.6008 level now faces the possibility of a top.
The dollar-Canadian dollar (
) currency pair surged to a new recovery high of 1.0737 this past week, although it reversed about half of those gains on Friday. Its corrective recovery remains intact and looks set to retarget the 1.0737 level.
The euro-yen (
) remains vulnerable to the downside after a cut through its 2010 low at 119.63 on Thursday pushed the cross pair to a low of 110.43 at the end of the week. This technical price deterioration leaves the cross exposed, with further risk toward 112.07.
The euro-pound (
) currency pair tumbled through key support at the 0.8601 level to test a low of 0.8426 on Thursday. But it rebounded from that low to close the week at 0.8609.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.