Well it was a big day for data and on the whole the data pointed to dollar upside. Non-Farms printed a great number once again, Euro retail sales came in under par, the critical UK services PMI missed expectations and the knives were out for the Aussie from the RBA chief overnight. All pointing to dollar strength. That is exactly what we got and it hasn’t painted a very pretty picture and could result in a tedious range bound scenario for the rest of summer now that the dollar has caught a bid and forced breaks of key levels in numerous charts. Early days yet to call, but things are no longer looking rosy for the Euro and a break of support seems likely to add to bearish sentiment there after the fragile recovery from ECB rate cut lows.
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We haven’t yet made it above the critical top of the major bearish channel once again so it is still entirely possible that we will simply hold here and continue with the shallow bearish channel rather than the steeper pink bearish channel but the outlook is no longer a clear cut picture. The charts are somewhat messy. Technically the charts point to this being an extreme of price and we should drop from here to hold within either the shallower channel or the steeper pink channel, both are acting as a confluence of resistance right now, but the strength of the move higher is cause for concern. We could just as easily break this channel for a second time. Until then our view is a cautious bearish bias, but we are on the edge. Not much higher and we will revert to a boring range bound scenario for the time being, especially when we take the price action of the EUR% index into account. I am bearish USD% while the bearish channel holds
**USD% Index Resistance (EURUSD support): EURUSD 1.3600, 1.3568, 1.3536**
**USD% Index Support (EURUSD support): EURUSD 1.3625, 1.3650**
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