The US dollar decline last week did nothing to clarify the bigger picture as majors remain stuck in ranges. A USD bounce is expected near term. Yen wave structure remains bullish (Yen crosses bearish).
Euro / US Dollar
I last left readers with this update…“until a break below 1.3747, there are numerous competing counts, including a triangle count as wave 4 within a diagonal from 1.2454. Bigger picture, I do expect weakness in the EURUSD but I’m not sure whether or not that decline occurs from here or after one more rally (above 1.4720).” Price action over the past week has failed to clarify the bigger picture. The EURUSD is approaching the top of its multi-month range in either a b wave (triangle or flat) or second wave. All 3 counts favor at least a short term turn lower.
British Pound / US Dollar
A triangle may be in its latter stages in the GBPUSD. Triangles consist of 5 waves (a-b-c-d-e) and the rally from 1.5980 would be wave d of the triangle. Favor the downside to at least 1.6260 near term.
Australian Dollar / US Dollar
The AUDUSD series of lower highs (and lower lows) since the June high of .8270 is in jeopardy as price is nearing the June 30th high of .8160. Bigger picture, the AUDUSD is at risk of a significant decline as the structure of the rally from .6005 is corrective (3 waves) and retraced close to 61.8% of the previous decline. Coming under .7955 would favor bears.
New Zealand Dollar / US Dollar
The NZDUSD is testing the top of its multi month range also. A push above the June high (.6600) would make the rally from the March low in 5 waves (bearish for short term but bullish for long term). The consolidation since the June high is either waves 1 and 2 of a bearish impulse or waves a and b of a 4th wave correction.
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. Resistance from Fibonacci extends to 95.00. Bears are favored against 97.00.
US Dollar / Canadian Dollar
The extent of the rally from 1.0782 almost assures that the entire decline from 1.3068 is complete. Additionally, the rally from 1.0782 unfolded as an impulse. On the 10th, I wrote that “I am not sure if the rally from 1.0782 is complete. A thrust higher from a running triangle is possible before a corrective decline. It is best to wait for clarity here before taking a strong stand.” The thrust higher was wave B of an expanded flat. Wave C is in 5 waves therefore a bottom and reversal is favored.
US Dollar / Swiss Franc
The USDCHF is still stuck in its 1.06-1.10 range. We are left with competing counts, shown with labels above, until a break of the range. If the trend has turned up, then 1.0630 should remain intact.
British Pound / Japanese Yen
The larger GBPJPY trend has turned back down. Favor the downside against 160.34. A drop below the January low of 135.00 is expected eventually. Coming under 152.40 would bolster the bearish case.
[I]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]