Foreign Exchange Market Commentary

EUR/USD closed higher on Tuesday as it extends this month's rally. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signalling that sideways to higher prices are possible near-term. If it extends the rally off August's low, the 75% retracement level of the 2008-decline crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that an important top has been posted.

USD/JPY closed lower due to profit taking on Tuesday as it consolidates below the 75% retracement level of the 2008-2009-decline crossing. A short covering rally tempered early session losses and the high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are diverging and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted.

GBP/USD closed lower due to profit taking on Tuesday as it consolidated some of last week's rally. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing would temper the near-term bullish outlook in the market. If it extends this month's rally, August's high crossing is the next upside target.

USD/CHF closed slightly higher on Tuesday as it extends this month's rally. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but remain bullish signalling that sideways to higher prices are possible near-term. If it extends this summer's rally, the 87% retracement level of the 2008-2009-decline crossing is the next upside target. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted.

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