Despite the USD decline, key levels remain intact. 1.4180 defines the EURUSD trend as does 1.6626 for the GBPUSD, .8124 for the AUDUSD, and 1.0650 for the USDCHF.
Euro / US Dollar
The poke above 1.4013 dampens confidence in the short term bearish count but does not invalidate it. Staying below 1.4181 keeps the trend pointed down. The series of lower highs and lows since 1.4340 may be a series of 1st and 2nd waves. Under this scenario, the decline from 1.4014 a third of a third (powerful) wave decline. It is also possible that the current decline is wave 4 of a diagonal from 1.2454 (alternate labels). A drop below 1.3747 would enable bears to move risk to 1.4014. The outlook for equities supports USD bulls also.
British Pound / US Dollar
It remains possible that the GBPUSD has made a significant high. Remember, the entire decline from 2.1160 is most likely unfolding as an impulse (5 waves) and just 3 waves have unfolded. The rally from 1.3500, although strong, still counts well as a correction (3 waves). In fact, price reached and reversed at a former 4th wave (common guideline). The rally from 1.5800 was an impulse, making it possible that wave v of C was truncated. Staying below 1.6626 keeps the topping scenario intact. Potential short term resistance is 1.6430/60.
Australian Dollar / US Dollar
The AUDUSD count shown above is similar to the GBPUSD in that wave v of C may be truncated. The rally from .7823 is in 5 waves but failed to exceed .8269. Usually, this would signal that an entirely new bull cycle is underway. But given the extension of the rallies from .6245 and .6986, this scenario is not probable. Near term, the decline below .7823 supports the topping scenario. Risk can be moved to .8124.
New Zealand Dollar / US Dollar
My focus remains on the longer term structure, especially the rally from .4890, which is a textbook zigzag. Waves A and C are equal, which is common. The NZDUSD unexpectedly exceeded .6474 Friday, thereby negating the short term bearish structure. The bearish implications from the aforementioned evidence remains however.
US Dollar / Japanese Yen
The triangle continues to play out. Wave e of the triangle should complete later this week. There is potential support at 95. There may be an opportunity to go long the USDJPY soon against 93.50 on anticipation of the terminal thrust that will end above 101.50. However, in looking at multiple markets (equities, metals, oil, FX), it appears that fear is about to return to the markets with a vengeance. As such, the USDJPY count in which the drop from 101.50 is a series of 1st and 2nd waves would be preferred. 93.50 defines the trend (above is bullish and below is bearish).
US Dollar / Canadian Dollar
The rally from 1.0782 can be counted a number of ways but to this point there is just 3 waves up from that level. The risk of at least a correction is high. Initial Fibonacci support is 1.1330 and structural support does not begin until 1.1220.
US Dollar / Swiss Franc
The USDCHF pattern is the exact same as the EURUSD (but as the inverse) 5 waves up from 1.0589 suggest that an important low is in place. Having yet to exceed 1.0990 (3 wave decline from there), favor the upside against 1.0650.
[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.
Please send comments about this report to [/I][I][email protected][/I]