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DOLLAR: While the Dollar was showing signs of a possible upside breakout in the prior trading session, the overnight action makes it clear that the Dollar just doesn’t have the resolve to forge a return to the June highs. In fact, we suspect that the Dollar bulls will need a weak Durable Goods reading and a soft New Home sales report on Wednesday morning to even rise above the 81.30 level in the September Dollar Index. While we think that the Dollar bulls will generally prevail in the near term, there just doesn’t appear to be a definitive theme operating in the currency markets overall. While the Pound, Canadian, Swiss and Euro would all seem to be poised to gain in the face of near term weakness in the Dollar this morning, the fear of even more slowing evidence from the US economic front later this week, seems to have knocked all of the currencies off balance. We do suspect that the Dollar will see a temporary decline off the US existing home sales data this morning, with a near term targeting on the downside pegged at 80.48. However, on a dip this morning, to the aforementioned downside target, we would suggest that aggressive short term players consider getting long the Dollar for a Wednesday morning recovery bounce.
EURO: It would appear as if the Euro is poised to win by default in the coming trading session. Perhaps the Euro sees the latest German sentiment readings as a supportive development and we assume that the US existing home sales data will add to that slight bullish tilt. However, with the outlook for the US economy expected to generally remain suspect, we are not sure that the September Euro is poised to see sustained aggressive gains in the coming trading sessions. Therefore in the first half of the trade today, we can’t rule out at least a temporary recovery bounce back above the 140.10 level in the September Euro. In fact, the technical trade probably sees the entrenched down trend pattern in the June Euro, as the overall prevailing force in the Euro and given a broadening of the slowing fears later this week, we would not be surprised to see the September Euro eventually fall below 137.50 level before Friday’s close.
YEN: The Yen might be the only “quasi” trend in the currency markets in the coming trading sessions. However, the trend in the Yen probably won’t be definitively bullish this morning, as the flight to quality angle could be temporarily dented in the wake of the scheduled US data flow this morning. However, we would suggest that aggressive short term traders look to buy the September Yen on a slight dip this morning back down to 104.68.
SWISS: The September Swiss seems to have built a solid base on the charts just below 92.00 and that support zone should support the Swiss for a possible return to the 94.00 level in the coming trading sessions. In fact, we suspect that the September Swiss will see a rise above 93.03 in the early going today, but that the market will lack the resolve to punch up to 94.00 level perhaps until Wednesday afternoon.
POUND: Like the Canadian, the Pound remains off balance and vulnerable to more selling pressure ahead as the Green shoots of recovery view has seemingly been replaced with concerns of more slowing. In fact, the markets seem to be in need of some additional assistance to shake off the slowing influences and that assistance doesn’t look to be forthcoming in the action today. Therefore, we suspect that the September Pound is poised for a near term slide back down to consolidation support on the charts at 161.85 and perhaps even a further slide later this week down to 160.00.
CANADIAN DOLLAR: With another new low for the move overnight, it would seem like the near term trend remains down. Not surprisingly the Canadian continues to correlate tightly with the overall macro economic view in the marketplace and that would seem to leave the bear camp generally in control for at least another trading session. Aggressive traders should look to sell an Existing home sales inspired bounce in the September Canadian Dollar this morning.
TODAY’S MARKET IDEAS: Slowing fears might not be definitive enough this morning to leave the Dollar and the Yen in control, but as the week progresses we suspect that Dollar and Yen bulls will prevail.
