Federal Reserve minutes failed to enliven the dollar rally, giving a chance for other currencies to make gains. Particular strength has been seen in AUD, which now looks to be on a move higher. 

Pound and dollar
Source: Bloomberg

GBP/USD struggles to break 50-hour SMA

The pound remains stuck in its downtrend against the US dollar, despite an overnight lift that has carried it back to the $1.54 level. So far today an attempt to break the 50-hour SMA ($1.5416) has been defeated, and with the Bank of England meeting today expected to be the usual non-event, there is little in the way of bullish news that might drive cable higher. A continued turn lower would head towards yesterday’s low around $1.5329, with the next target being the 100-day SMA at $1.5272.

At present cable is showing no desire to go back above the 200-day SMA ($1.5435), but this is the first step that will be needed to transform this currency pair from ‘sell the rallies’ to ‘buy the dips’. 

EUR/USD could breach $1.11

The pair recovered yesterday and moved back above the $1.10 level, and with daily stochastics turning bullish I am now looking for a move back towards the 50-day SMA at $1.1177, even with the big caveat that the eurozone crisis could upset any and all best laid plans. A more ambitious goal would be the $1.14 area, which proved to be such durable resistance in June. Any move lower would need to break the $1.10 level, which would then clear the way to a move to $1.08.

For now the 200-hour SMA ($1.1104) is providing a stumbling block for EUR/USD, but once this and $1.11 is cleared bulls can feel confident that we are on the way higher.

AUD/USD looking positive for a move higher

Here too we have seen a bullish crossover in daily stochastics, helped along by cheery economic data overnight regarding the Australian employment situation. For the first time this month the currency pair has moved above the 50-hour SMA ($0.7433), with an initial target around $0.7535 being the first area to watch for.

With hourly stochastics now overbought we may see some short-term weakness during the day, but with Fed minutes out of the way and Australian data picking up, it may be that there are now enough fundamental drivers to push AUD/USD higher.

USD/CAD move has delivered 500 points

It is hard not to feel wistful seeing the end of the rally in USD/CAD, a move that has delivered around 500 points over the past three weeks. Another lunge at C$1.28 cannot be ruled out, but daily stochastics are now rolling over and thus the default outlook here should be a bearish one.

The first hurdle to clear on the downside is the C$1.2690/$1.27 area, which would then push us towards C$1.2650 and then the 200-hour SMA at C$1.2572. A break of C$1.2750 would negate the bearish scenario. 

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