Worries over the Euro remained the focus of attention once again in global forex markets today, with Portugal and Belgium remaining centre stage. Overnight, we saw some interesting price action on the euro denominated pairs, as both the Chinese and Japanese suggested they would be ready, willing, and able to step in and help purchase bonds should the need arise,  which saw the euro bounce sharply higher against the US dollar on the news. However, the London open brought a more measured approach but throughout the day the euro dollar pair have bounced sideways in a relatively narrow range, as markets and participants try to avoid the inevitable, with the EUR/USD clinging above the 1.2920 region on the daily chart. Despite the minor recovery of the last two days, the outlook remains firmly bearish for the pair in the short to medium term and any break below the 1.2870 region may see a deeper move develop down towards the 1.2650 area and beyond.

With very little news again today, the US dollar traded in a tight range, ending the US session as a small doji candle on the daily chart and trading at the 80.89 level once again. From a technical perspective the USD index remains firmly bullish, and provided we see a break and hold above the 81.44 high of late November, coupled with a breach of the 200 day moving average which now sits overhead at 81.70, then this will duly confirm the market sentiment for the dollar, and as such we can expect to see the index climb to retest resistance in the 82 to 83.50 region.

One of the interesting pairs to watch this week is the USD/CHF which has fallen from a high of 1.1731 last year, to it’s current level of 0.9736, having tested the 0.9319 region last week, as investors rushed to buy the Swiss Franc as a safe haven paper asset. However, this sentiment now appears to be changing, and from a technical perspective we saw a bullish engulfing signal on the weekly chart, suggesting that the pair are now reversing, and beginning the long slow climb back to parity and beyond. As such, this represents an excellent longer term trade, with a break above parity as an initial target. Once clear of this area, then expect to see the pair push higher to test resistance in the 1.01 to 1.02 area in due course.