The Australian, New Zealand, and Canadian dollars have traded at 2009 highs against the US dollar but momentum considerations suggest that a pullback is likely. The EURUSD failed prior to its 2009 high of 1.4340 and the decline may extend below 1.4120.
Euro / US Dollar
A 4th wave triangle is complete and expectations are for an upside break through 1.4340 and then 1.4720. Failure ahead of 1.4340 suggests that wave i of 5 (of C) may be complete. A small second wave could reach 1.4035/85 (Fibonacci support) before the advance continues. As such, short term traders may wish to trade from the short side the next several days. Longer term traders should wait for a better buying opportunity.
British Pound / US Dollar
A triangle is nearing completion in the GBPUSD. The pair is vulnerable to a drop below 1.6260 prior to breaking higher and test of 1.700. Support is below 1.6260 and 1.6030 is the bullish line in the sand.
Australian Dollar / US Dollar
The AUDUSD has broken above its June high, confirming that wave C (as well as the entire rally from the October low) is near completion. .8385 (61.8% of the decline from .9856) is a level to watch as potential resistance. The risk of a top and reversal is high (momentum divergence with the new high).
New Zealand Dollar / US Dollar
The NZDUSD is in the same position as the AUDUSD. Short term structure is not clear and there is no evidence of a top but the risk of a top and reversal is high given divergence with the recent high.
US Dollar / Japanese Yen
The drop below 93.50 eliminates the bullish triangle count and leaves us with the bearish count in which the decline from 101.50 is a series of 1st and 2nd waves. The USDJPY is resisted by the 200 day SMA (95.22 today). Bears are favored against 97.00.
US Dollar / Canadian Dollar
The entire rally from 1.0782 has now been retraced. Additional weakness is expected over the next several weeks in order to complete the decline from 1.1730 and by extension the entire decline from 1.3068. 1.0588 is the next level of potential support (Fibonacci). Near term, the USDCAD may stage a rally back to 1.1115 as short term momentum indicators are divergent with the latest lows. Structurally, the rally would be considered a B wave within the second A-B-C pattern since the top at 1.3068.
US Dollar / Swiss Franc
Sticking with the USD bearish count, expectations over the next several weeks are for a thrust lower that ends below 1.0367. Bears are favored against 1.0959 and near term resistance is at 1.0820. 1.0037 is a potential target (100% extension of 1.2303-1.0367).
British Pound / Japanese Yen
After briefly trading above a line drawn off of the June 12, June 30, and July 23 highs, the GBPJPY has dipped to test a support line drawn off of the July 13 and 22 lows. Coming beneath 155.15 would expose potential support from Fibonacci at 154.33.
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Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.
Please send comments about this report to <[email protected]>[/I]