Week of July 30, 2008- European Session

The US Dollar made a broad rally yesterday as better than expected consumer confidence fueled the US dollar rally in a corrective move with yesterday’s EURUSD fall essentially limited by the 61.8% of the 1.5302-1.6037 rise at 1.5583, although prices did probe a bit lower reaching an intraday low of 1.5558. A daily close below 1.5583 will confirm lower prices in the short term with 1.5302 as the next objective, however, as mentioned in this week’s outlook, the pair remains in a 1.5583-1.5756 consolidation zone with a sustained break of this zone favoring an extension in the direction of the break. Elsewhere, today’s outlook favors JPY buying with GBPJPY and AUDJPY likely to move lower, while USDCAD also favors a move higher today.

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