Foreign Exchange Market Commentary

EUR/USD closed higher due to short covering on Tuesday as it consolidated some of last week's decline. The high-range close sets the stage for a steady to higher opening on Wednesday.

Stochastics and the RSI are oversold but remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends this winter's decline, the 50% retracement level of the 2008-2009-rally crossing is the next downside target. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted.

USD/JPY closed lower on Tuesday and below the 10-day moving average crossing signalling that a short-term up might be in place. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought and are turning bearish signalling that a short-term top might be in or is near. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted. If it extends the rally off January's low, the reaction high crossing is the next upside target.

GBP/USD closed higher on Tuesday as it extended the rally off January's low. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain bullish signalling that sideways to higher prices are possible near-term. If it extends the rally off January's low, December's high crossing is the next upside target. Closes below last Thursday's low crossing are needed to confirm that a long-term high has been posted.

USD/CHF closed lower due to long covering on Tuesday as it rebounded off the 38% retracement level of the 2008-2009-decline crossing. The mid-range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If it extends the rally off November's low, the 50% 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 long-term high has been posted.