Foreign Exchange Market Commentary

EUR/USD closed higher due to short covering on Friday as it consolidates above the 62% retracement level of the 2008-2009-rally crossing. The mid-range close sets the stage for a steady opening on Monday.

Stochastics and the RSI are diverging but are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. If it resumes this winter's decline, the 75% retracement level of the 2008-2009-rally crossing is the next downside target.

USD/JPY closed lower on Friday as it extends last week's decline. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends last week's decline, this month's low crossing is the next downside target. Closes above the 10-day moving average crossing would confirm that a short-term bottom has been posted.

GBP/USD closed slightly higher on Friday due to short covering but remains below the 50% retracement level of 2009's rally crossing. The mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are oversold but remain neutral to bearish hinting that additional weakness is possible. If it extends the decline off January's high, the 62% retracement level of 2009's 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/CHF closed lower on Friday and the mid-range close sets the stage for a steady opening on Monday. Stochastics and the RSI are diverging and are turning neutral to bearish hinting that a short-term high might be in or is near. Closes below the 20-day moving average crossing are needed to confirm that a short-term high has been posted. If it resumes the rally off November's low, the 62% retracement level of the 2008-2009-decline crossing is the next upside target.