Dollar Recovers, Watch for a EURUSD Break

The EURUSD is back below 1.54 after nearly reaching 1.56 yesterday. A drop below 1.5360 would set sights on our first bearish objective at 1.5230.


We are bearish as long as the EURUSD is below 1.5643. As mentioned last week, 1.5230 is where the decline from 1.5694 would equal the 1.6018-1.5554 decline. This is our initial objective. Very near term, the decline this morning inspires confidence in the larger bearish bias. Resistance is near 1.5440.

STRATEGY: Bearish, against 1.5643, target below 1.5230 and below 1.50

Visit our recently updated Euro Currency Room for specific resources geared towards this currency.


The structure of the rally from 95.72 is evidence that the larger trend remains down. The advance consists of overlapping waves and can be counted as a double zigzag (W-X-Y); which is two 3 wave segments connected by an X wave. The USDJPY is at a support line right now and coming under there as well as 103.20 would strongly suggest that a wave 4 top is finally in place.

Visit our recently updated Yen Currency Room for specific resources geared towards this currency.

STRATEGY: Bearish, against 105.70, target TBD
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Unfortunately, we were not patient enough with Cable as it has dropped the day after we stated that “our alternate count is beginning to look better than the favored. We had favored the idea that the GBPUSD was entering a 3rd wave decline (of C). However, if this count were correct, then the GBPUSD should have accelerated lower by now. Over the last 2 months, the pair has gone sideways and it is more likely that this serves to build a bullish base that will lead to a rally through 2.04. The decline to 1.9599 was likely an X wave.” The decline could still be an X wave but the drop this morning and price remaining below the trendline keeps the trend bearish.

Visit our recently updated British Pound Currency Room for specific resources geared towards this currency.


We favor the upside and are presenting a short term count this morning. If a C wave is unfolding from .9887, then there is likely one more leg higher that will unfold. Look for support near 1.0330 (Fibo and structural support) in the coming days.


The drop below 1.0037 negates our near term bullish bias. Longer term, we remain bulls due to the 5 wave advance from .9710 to 1.0324. The USDCAD looks poised to test the 61.8% at .9944. A drop to this level should lead to a bottom and advance that breaks through 1.0324.

Visit our recently updated Canadian Dollar Currency Room for specific resources geared towards this currency


Longer term, the AUDUSD is in the process of forming a major multi year top but that top is not confirmed yet. We view the advance from the 2001 low as an A-B-C advance. The rally from the 2004 low at .6771 is wave C. The rally through the November 2007 high at .9400 satisfies minimum expectations for wave 5 of C from .8512. The longer term implications are that a multi-year top will form (possibly has already formed) and the AUDUSD will decline significantly.


The rally through .7879 negates our short term bearish bias. Similar to the AUDUSD, we expect a long term top to form (may have already formed in the NZDUSD but the short term pattern is unclear and does not confirm this suspicion).

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[1] STRATEGY is a summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.