Quick Note on Today's Price Action

The euro briefly poked through the $1.25 level, but has run out of steam.  It completed a 61.8% retracement of the losses since the last correction ran out of steam on May 28th near $1.2625.   On the short-term momentum studies I use for intraday movement, there are bearish divergences emerging.  There is initial potential toward $1.2450.  

That said, following Friday's key reversal, where the euro fell to new lows for the move and then closed above the previous day's high is a constructive technical development and there was some follow-through today.  The daily momentum indicators are constructive and the MACDs are poised to cross.  However, the sentiment remains poor and the fundamental backdrop in Europe is hardly supportive.  

The Swiss franc also recorded a key reversal on Friday and it has also seen some follow through buying in North America today.  Dollar support near CHF0.9600 was briefly and shallowly penetrated.  The short-term momentum studies are also flashing potential dollar bullish divergence.  

The CHF0.9622 area was the 61.8% retracement objective of the last leg up for the greenback, but the CHF0.9650 area may be more important.  A trend line down off the May 1 lows and May 22 lows comes in today near CHF0.9570.  A break of  that would like target around CHF0.9350.  

Unlike the euro and Swiss franc, sterling has been unable to build on Friday's recovery.  It is recording an inside session.  The daily RSI and MACD studies do not appear to constructive as for the euro and Swiss franc.  The intraday studies are also not very clear at the moment,  Support is seen in $1.5340-50.  The pre-weekend high was set near $1.5440 and this is seen as the immediate resistance. 

The dollar has been confined to slightly less than half a yen range against the Japanese unit and is confined to last Friday's ranges.   With the intraday momentum indicators turning down, it looks like the high for the day has been recorded.  Initial support is seen near JPY78.20 and then JPY78.   

The Reserve Bank of Australia meets tomorrow and the market is divided between a 25 and 50 bp rate cut.  The Australian dollar saw some minor follow through after last Friday's reversal but the gains did not stick.  A break now below $0.9700 would seem to confirm the high is in place for the day.  Support is pegged in the $0.9660-80 area.   The intraday momentum indicators are flashing bearish divergence. 

The Bank of Canada also meets tomorrow.  No one expects a shift in policy, though there is some risk of a more dovish statement.  The US dollar marginally extended Friday's gains but CAD1.0450 proved a sufficient cap.  The intraday momentum is flagging for the greenback and a push back toward CAD1.0380-CAD1.0400 would not be surprising, though it would seem to require some stabilization of the equity market.